Blueprint





 






Exhibit
10.1

 


 


 


 


 


 


ASSET
PURCHASE AGREEMENT


 



by and among


 



NOVUME SOLUTIONS, INC.,


 


OPENALPR
TECHNOLOGY, INC.


 



And



MATTHEW HILL


 


Dated
as of November 14, 2018


 


 


 


 


 


 


 


 


 




 



 


 








 





 


TABLE OF
CONTENTS

 


	

Article
1

	


DEFINITIONS; INTERPRETATION

	


1


	

1.1

	


Certain Definitions

	


1


	

1.2

	


Interpretation

	


2


	

Article
2

	


PURCHASE AND SALE

	


2


	

2.1

	


Purchase and Sale of Transferred Assets

	


2


	

2.2

	


Transferred Assets

	


2


	

2.3

	


Excluded Assets

	


4


	

2.4

	


Assumed Liabilities

	


5


	

2.5

	


Retained Liabilities

	


6


	

2.6

	


Closing

	


7


	

2.7

	


Purchase Price

	


8


	

2.8

	


Prorations

	


10


	

2.9

	


Allocation of Purchase Price

	


11


	

2.10

	


Title and Risk

	


11


	

Article
3

	


REPRESENTATIONS AND WARRANTIES OF SELLER

	


11


	

3.1

	


Status of Seller and the Seller Subsidiaries

	


12


	

3.2

	


Authorization; No Conflicts

	


12


	

3.3

	


Financial Matters

	


13


	

3.4

	


Taxes

	


13


	

3.5

	


Real and Personal Property

	


14


	

3.6

	


Intellectual Property and Technology

	


15


	

3.7

	


Material Contracts

	


17


	

3.8

	


General Employee Matters; Benefit Plans and Benefits

	


19


	

3.9

	


Litigation and Other Proceedings

	


22


	

3.10

	


Compliance with Laws

	


22


	

3.11

	


Environmental Matters

	


22


	

3.12

	


Brokers and Commissions

	


22


	

3.13

	


Customers

	


23


	

3.14

	


Vendors

	


23


	

3.15

	


Accounts Receivable

	


23


	

3.16

	


Privacy and Security

	


23


	

3.17

	


Product Warranty

	


24


	

3.18

	


Affiliate Transactions

	


25


	

3.19

	


Insurance

	


25


	

3.20

	


Investment

	


26


	

3.21

	


Certain Business Practices.

	


26


	

3.22

	


No Omissions

	


26






 



 

-i-







 





 


	

Article
4

	


REPRESENTATIONS AND WARRANTIES OF BUYER

	


27


	

4.1

	


Status of Buyer

	


27


	

4.2

	


Authorization; No Conflicts

	


27


	

4.3

	


Litigation

	


28


	

4.4

	


Independent Investigation

	


28


	

4.5

	


Brokers and Commissions

	


28


	

Article
5

	


COVENANTS

	


29


	

5.1

	


Conduct of Business by Seller

	


29


	

5.2

	


Affirmative Covenants Relating to Seller

	


30


	

5.3

	


Consents and Closing Conditions

	


30


	

5.4

	


Access to Information

	


31


	

5.5

	


Confidentiality

	


32


	

5.6

	


Exclusivity

	


32


	

5.7

	


Maintenance of Books and Records

	


33


	

5.8

	


Update of Disclosure Schedules

	


33


	

5.9

	


Restrictive Covenants

	


33


	

5.10

	


Further Assurances

	


34


	

Article
6

	


TAX MATTERS

	


34


	

6.1

	


Proration of Taxes

	


34


	

6.2

	


Cooperation on Tax Matters

	


35


	

6.3

	


Tax Proceedings

	


36


	

Article
7

	


EMPLOYEE MATTERS

	


36


	

7.1

	


Employment of Transferred Employees

	


36


	

7.2

	


Third Party Rights; Amendments to Employee Plans

	


36


	

Article
8

	


BUYER’S CONDITIONS TO CLOSING

	


37


	

8.1

	


Representations and Warranties

	


37


	

8.2

	


Performance of Covenants

	


37


	

8.3

	


No Litigation

	


37


	

8.4

	


No Orders

	


37


	

8.5

	


Material Adverse Effect

	


37


	

8.6

	


Consents

	


37


	

8.7

	


Closing Documents

	


37


	

8.8

	


Financing

	


37


	

8.9

	


Audit Financials

	


37


	

Article
9

	


SELLER’S CONDITIONS TO CLOSING

	


38


	

9.1

	


Representations and Warranties

	


38


	

9.2

	


Performance of Covenants

	


38


	

9.3

	


No Litigation

	


38


	

9.4

	


No Orders

	


38


	

9.5

	


Closing Documents

	


38






 



 

-ii-







 





 


	

Article
10

	


ITEMS TO BE DELIVERED AT CLOSING

	


38


	

10.1

	


Items to be Delivered by Seller

	


38


	

10.2

	


Items to be Delivered by Buyer

	


39


	

Article
11

	


TERMINATION

	


39


	

11.1

	


Termination by Mutual Consent

	


39


	

11.2

	


Termination by either Buyer or Seller

	


39


	

11.3

	


Termination by Buyer

	


40


	

11.4

	


Termination by Seller

	


40


	

11.5

	


Notice of Termination

	


40


	

11.6

	


Effect of Termination and Abandonment

	


40


	

Article
12

	


SURVIVAL; INDEMNIFICATION

	


41


	

12.1

	


Survival of Representations and Warranties

	


41


	

12.2

	


General Indemnification

	


41


	

12.3

	


Limitations on Indemnification by Seller and Founder.

	


42


	

12.4

	


Limitations on Indemnification by Buyer

	


42


	

12.5

	


Manner of Payment.

	


43


	

12.6

	


Third Party Claims

	


43


	

12.7

	


Direct Claims

	


44


	

12.8

	


Final Purchase Price Adjustment.

	


44


	

12.9

	


Exclusive Remedies

	


44


	

12.10

	


Limitation of Consequential Damages

	


45


	

Article
13

	


MISCELLANEOUS

	


45


	

13.1

	


Notices

	


45


	

13.2

	


Amendment

	


46


	

13.3

	


Counterparts

	


46


	

13.4

	


Binding on Successors and Assigns

	


46


	

13.5

	


Severability

	


46


	

13.6

	


Waivers

	


46


	

13.7

	


Press Releases and Public Announcements

	


47


	

13.8

	


Headings

	


47


	

13.9

	


Entire Agreement

	


47


	

13.10

	


Choice of Law

	


47


	

13.11

	


Venue

	


47


	

13.12

	


Waiver of Jury Trial Rights

	


47


	

13.13

	


No Third-Party Rights

	


48


	

13.14

	


Transfer Taxes

	


48


	

13.15

	


Expenses

	


48


	

13.16

	


Specific Performance

	


48


	

13.17

	


Confidentiality

	


49


	

13.18

	


No Recourse

	


49


	

13.19

	


Release

	


49







 



-iii-








 






 


EXHIBITS


 


	

Exhibit A

	

Form of
Bill of Sale


	

Exhibit B

	

Form of
Assignment and Assumption Agreement


	

Exhibit C

	

Form of
IP Assignments


	

Exhibit
D

	

Allocation
Statement







 



-iv-








 







ASSET PURCHASE AGREEMENT


 


THIS
ASSET PURCHASE AGREEMENT (as may be amended or restated from time
to time, this “Agreement”) is made as of
November 14, 2018, by and among OpenALPR Technology, Inc., a
Florida corporation (“Seller”), Novume
Solutions, Inc., a Delaware corporation (“Buyer”), and Matthew Hill
(“Founder”).


 



RECITALS


 


WHEREAS, Seller,
directly or indirectly through certain of its wholly owned
subsidiaries (collectively, the “Seller Subsidiaries”)
engages in the Business;


 


WHEREAS, Seller
wishes to sell, and cause the Seller Subsidiaries to sell, to
Buyer, and Buyer wishes to purchase from Seller and the Seller
Subsidiaries, all of the Transferred Assets, upon the terms and
subject to the conditions of this Agreement;


 


WHEREAS, Buyer has
agreed to assume from Seller and the Seller Subsidiaries the
Assumed Liabilities, upon the terms and subject to the conditions
of this Agreement;


 


WHEREAS,
concurrently with the execution and delivery of this Agreement,
Buyer and Founder are entering into an employment agreement
(including standard compliance provisions with respect to company
policies of Buyer) effective as of the Closing (the
“Founder Employment
Agreement”); and


 


WHEREAS, each of
the parties hereto desires to set forth certain representations,
warranties and covenants, and to establish certain closing
conditions, made to induce the others to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby.



AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises, covenants and
agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:


 







ARTICLE
1 




DEFINITIONS; INTERPRETATION

 


 


1.1           Certain
Definitions. Capitalized terms
used but not otherwise defined in this Agreement shall have the
meanings set forth in Schedule A attached to this
Agreement.


 


 




 

-1-








 






 


1.2           Interpretation.
The words “hereof,” “herein,” and
“hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Terms defined in the
singular shall have correlative meanings when used in the plural,
and vice versa. The use of the word “or” shall not be
exclusive unless expressly indicated otherwise. Any reference to
“days” means calendar days unless Business Days are
expressly specified. The word “party” shall, unless the
context otherwise requires, be construed to mean a party to this
Agreement. Any reference to a party to this Agreement or any other
agreement or document contemplated hereby shall include such
party’s successors and permitted assigns. The word
“will,” when referring to an action by a party, shall
be construed to have the same meaning and effect as the word
“shall.” Unless otherwise specifically indicated, all
references to “dollars” or “$” shall refer
to the lawful currency of the United States. The headings herein
are for convenience of reference only, do not constitute part of
this Agreement, and shall not be deemed to limit or otherwise
affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. All Exhibits
and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth
in full herein. Any capitalized terms used in any Exhibit or
Schedule but not otherwise defined therein, shall have the meaning
as defined in this Agreement. Unless otherwise specifically
indicated, any agreement or instrument defined or referred to
herein or in any agreement or instrument that is referred to herein
shall mean such agreement or instrument as from time to time
amended, modified or supplemented, including by waiver or consent.
Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.”


 



ARTICLE
2 




PURCHASE AND SALE


 


2.1           Purchase
and Sale of Transferred Assets. At the Closing
and except as otherwise specifically provided in this Article 2, upon and subject to
the terms and conditions of this Agreement, Seller agrees to, and
agrees to cause the Seller Subsidiaries to, grant, sell, convey,
assign, transfer and deliver to Buyer, and Buyer agrees to
purchase, acquire and accept from Seller and the Seller
Subsidiaries, all right, title and interest in the Transferred
Assets as of the Closing, free and clear of all Liens other than
Permitted Encumbrances, for (a) the Purchase Price and (b) the
assumption of the Assumed Liabilities. The purchase and sale of the
Transferred Assets and the assumption of the Assumed Liabilities
are collectively referred to in this Agreement as the
“Acquisition”.


 


2.2           Transferred
Assets. The term
“Transferred
Assets” means all of Seller’s and the Seller
Subsidiaries’ right, title and interest in, to and under all
of the assets of Seller and Seller Subsidiaries, including the
following assets, properties and rights, wherever located, whether
tangible or intangible, accrued or contingent, as they exist as of
the time of Closing, in each case, other than (A) the Excluded
Assets, and (B) as otherwise provided in this Section 2.2:


 


(a)           subject
to Section 2.3, all
contracts, licenses, indentures, agreements, commitments,
statements of work and other legally binding instruments or
arrangements, whether written or oral (collectively,
“Contracts”) set forth on
Section 2.2(a) of the
Disclosure Schedule and all other Contracts to which Seller
or any of the Seller Subsidiaries is a party or by which Seller or
any of the Seller Subsidiaries is bound that are used or held for
use in the operation or conduct of the Business as currently
conducted (the “Transferred
Contracts”);


 


 




 

-2-








 






 


(b)           all
rights, Claims and causes of
action of Seller or any of
the Seller Subsidiaries to the
extent arising out of, relating to or in respect of any
Transferred Asset or any
Assumed Liability, other than (i) any
such items arising under insurance policies of Seller
or any of the Seller
Subsidiaries (other than any insurance
proceeds received by Seller or
any of the Seller Subsidiaries on account of losses that occur with respect to
the Transferred Assets after
the Closing), and (ii) all
of Seller’s or any of
the Seller Subsidiaries’
rights to assert Claims,
demands, actions, suits and causes of action, whether class,
individual or otherwise in nature, in law or in equity,
including any Claim, demand, action, suit or cause of action for
damages, injunctive relief, declaratory relief or other relief
under the Antitrust Laws of any
foreign country or the United States or any state thereof, unfair
competition, unfair practices, price discrimination, unitary
pricing, consumer protection, fraud prevention or trade practice
laws (in any such case, domestic or foreign) (collectively,
“Seller
Claims”), that
Seller or any of the Seller
Subsidiaries, in any capacity, ever
had, now has or may or shall have in the future, whether known or
unknown, arising out of, relating to or in respect of (A)
the Seller’s or Seller Subsidiaries’ purchase or procurement of any good,
service or product or (B) Seller’s or any of the Seller
Subsidiaries’ purchase or
procurement of any good, service or product for, or on behalf of,
the Seller or any Seller
Subsidiary, in either case of
clauses (A) or
(B), at any time up until the
Closing and not relating to an
Assumed Liability, along with any and
all recoveries by settlement, judgment or otherwise in connection
with any such Seller Claims;


 


(c)           to
the extent permitted by Law,
all personnel and employment records that relate to the
Transferred Employees,
provided,
that Seller shall be permitted
to retain copies thereof;


 


(d)           all
items of inventory, equipment, and
other tangible personal property that is used or held for use
in the operation or conduct of the Business as currently
conducted, including
the items of equipment and other
tangible personal property, including items listed on Section 2.2(d) of
the Disclosure
Schedule;


 


(e)           all
registered Marks, registered Copyrights, and applications for any
of the foregoing that are owned by Seller or any Seller Subsidiary
and used in the operation or conduct of the Business as currently
conducted, including as set forth on Section 2.2(e) of the Disclosure
Schedule (the “Transferred Registered
IP”);


 


(f)           all
Intellectual Property (other than
the Transferred Registered IP)
owned by Seller or any
Seller Subsidiary that is used or held
for use in the operation or conduct of the Business as
currently conducted, including
the Software applications and other items that are set forth
on Section 2.2(f) of
the Disclosure
Schedule (and any source code
and tangible embodiments thereof) (collectively, and together with
the Transferred Registered IP,
the “Transferred Intellectual
Property”);


 


(g)           customers’
and suppliers’ lists, other
distribution lists, billing records, sales and promotional
literature (including marketing, advertising, promotional, sales and
training materials), manuals and customer and supplier
correspondence (in all cases, in any form or medium) owned
by Seller or any of the
Seller Subsidiaries (i) that are used
or held for use exclusively in, or (ii) if not exclusive, copies of
the same, to the extent used or held for use in the
operation or conduct of the Business as currently
conducted, except to the extent
relating to an Excluded Asset or a Retained Liability;


 


 




 

-3-








 






 


(h)           all
credits, prepaid expenses, deferred charges, advance payments,
security deposits, prepayments, letters of credit, deposits,
refunds, rebates, notes receivable and other rights to payment (i)
that are used or held for use exclusively in, or (ii) if not
exclusive, to the extent used or held for use in, the operation or
conduct of the Business as currently conducted;

 


(i)           all
guarantees, warranties, indemnities
and similar rights in favor of Seller or any Seller Subsidiary in respect of any Transferred Asset
or any Assumed
Liability;


 


(j)           all
goodwill, going concern value and
other intangible assets generated by, or primarily related to or
primarily associated with the Business;


 


(k)           all
pending bids, proposals or offers to
enter into Contracts (A) that
are to be used or held for use exclusively in, or (B) if not
exclusive, to the extent to be used or held for use in, the
operation or conduct of the Business as currently
conducted;


 


(l)           certain
leaseholds in or leases of real property and other interests in
real property (including all prepaid rent, security deposits and
any options to renew or extend the term of the subject lease) of
Seller or any of the Seller Subsidiaries as set forth on
Section 2.2(l) of the
Disclosure Schedule (collectively, the “Transferred
Leases”); 


 


(m)           all
accounts receivable, notes receivable and similar rights to receive
payments of Seller or any of
the Seller Subsidiaries at
the Closing arising out of,
relating to or in respect of the operation or conduct of the
Business prior to the
Closing;


 


(n)           all
licenses that are used or held for use
for or in connection with, or are necessary to, the operation of
the Business, including
those set forth on Schedule
2.2(n), Business IP Licenses, and all pending
applications therefor or renewals thereof (collectively, the
“Transferred
Business Licenses”);
and

 


(o)           the
assets specifically identified
on Section 2.2(o) of
the Disclosure
Schedule.


 


2.3           Excluded
Assets. Notwithstanding
anything to the contrary in this Agreement (except as provided with
respect to the Net Working Capital Adjustment), the Transferred
Assets shall not include any of the following (collectively, the
“Excluded
Assets”):


 


(a)           All
cash, bank accounts, cash equivalents or securities of Seller or
any of the Seller Subsidiaries;


 


 




 

-4-








 






 


(b)           all
rights, Claims and causes of
action of Seller or any of
the Seller Subsidiaries to the
extent arising out of, relating to or in respect of the matters set
forth on Section 2.3(b) of
the Disclosure
Schedule (the
“Retained
Litigation”), any
other Excluded Asset or
any Retained Liability,
including (A) any such items arising
under insurance policies of Seller or any of the Seller Subsidiaries
(other than any insurance proceeds
received by Seller or any of
the Seller Subsidiaries on
account of losses that occur with respect to the Transferred
Assets after the
Closing) and (B) all Seller
Claims that Seller or any of the Seller
Subsidiaries, in any capacity, ever
had, now has or may or shall have in the future, whether known or
unknown, arising out of, relating to or in respect of (x)
the Seller’s or any
of Seller Subsidiaries’
purchase or procurement of any good, service or product, or
(y) Seller’s or any of
the Seller Subsidiaries’
purchase or procurement of any good, service or product for, or on
behalf of, Seller or any
Seller Subsidiary, in either case of
(x) or (y), at any time up until the Closing and not relating to an Assumed
Liability, along with any and all
recoveries by settlement, judgment or otherwise in connection with
any such Seller Claims;


 


(c)           all
guarantees, warranties, indemnities
and similar rights in favor of Seller or any of the Seller Subsidiaries
in respect of any Excluded
Asset or any Retained
Liability;


 


(d)           the
Benefit Plans, and any assets thereof;


 


(e)           all
records prepared in connection
with the sale of the Business (or any portion thereof), including
bids received from third
Persons and analyses relating to
the Business (or any portion
thereof);


 


(f)           all
rights of Seller or any of
the Seller Subsidiaries under
this Agreement, the
Other Agreements and any other
agreements, certificates and instruments delivered in connection
with this Agreement and
the Other Agreements;


 


(g)           all
communications and records of communications between Seller
and its Affiliates and its counsel in connection with this Agreement
and the transactions contemplated
thereby; and


 


(h)           all
rights with respect to or arising under the Excluded
Assets.


 


2.4           Assumed
Liabilities. At the Closing
hereunder and except as otherwise specifically provided in this
Section 2.4, Buyer
shall assume and shall timely pay, perform and discharge when due,
all of the following liabilities, commitments and obligations of
Seller and the Seller Subsidiaries (collectively, the
“Liabilities”) and whether
due or to become due, in each case, to the extent such Liabilities
arise primarily out of or otherwise primarily relate to the
Business or the Transferred Assets (collectively, the
“Assumed
Liabilities”):


 


(a)           all
Liabilities of Seller and the Seller Subsidiaries relating
exclusively to the operation of the Business that are unpaid at the
Closing Date and that (A) are identified on Section 2.4(a) of the Disclosure
Schedule or (B) arose in the Ordinary Course of Business
between the date hereof and the Closing Date and which are
reflected on the Closing Balance Sheet, including all such
Liabilities for accounts payable to trade creditors, but excluding
employee payroll and payroll taxes and excluding in all cases any
such Liabilities to the extent arising from any breach, default,
violation or other form of noncompliance by Seller or any of the
Seller Subsidiaries prior to the Closing;

 


(b)           all
Liabilities agreed to be performed by Buyer pursuant to the terms
of this Agreement or any of the Other Agreements;


 


 




 

-5-








 






 


(c)           all
Liabilities with respect to a Transferred Employee that arise on or
after the time such Transferred Employee becomes an employee of
Buyer;


 


(d)           all
Liabilities arising under the Transferred Contracts, Transferred
Leases and Transferred Intellectual Property, in each case to the
extent such Liabilities (A) relate to performance obligations
thereunder arising prior to the Closing and not yet performed as of
the Closing or (B) otherwise arise or accrue on or after the
Closing, excluding in all cases
any such Liabilities to the extent arising from any breach,
default, violation or other form of noncompliance by Seller or any
Seller Subsidiaries thereunder prior to the Closing;


 


(e)           Subject
to Section
12.2(a)(v) all Liabilities to the extent arising out of,
relating to or in respect of any and all services and products
manufactured or sold by the Business, including any such
liabilities for refunds, adjustments, allowances, repairs,
exchanges, returns and warranty, product liability, merchantability
and similar Proceedings relating to any such liabilities, in each
case to the extent incurred in the Ordinary Course of
Business;


 


(f)           all
Liabilities (including any defense costs, third party legal fees
and similar expenses) in respect of any action or Proceeding and
Claims to the extent arising out of, relating to or in respect of
the Transferred Assets, the Business or the operation or conduct of
the Business, in each case after the Closing;


 


(g)           all
Taxes to the extent arising out of, relating to or in respect of
the Transferred Assets, the Business or the operation or conduct of
the Business by Buyer with respect to any Straddle Period
to the extent that Buyer
is liable therefor pursuant to
Section
6.1(b);
and

 


(h)           Buyer’s
share of all applicable Transfer Taxes pursuant to Section
13.14.

 


2.5           Retained
Liabilities. Other than the
Assumed Liabilities, Buyer will not assume or be liable for any
other Liabilities, including Retained Liabilities, and Seller will
remain responsible for paying, performing and discharging all such
Liabilities. “Retained Liabilities”
shall include, without limitation, the following:


 


(a)           all
liabilities and obligations agreed to be performed by Seller and
the Seller Subsidiaries pursuant to the terms of this Agreement or
any of the Other Agreements;


 


(b)           all
Taxes except as expressly assumed by Buyer pursuant to Section 2.4;


 


(c)           any
liability or obligation relating to an Excluded Asset, including
the Retained Litigation;


 


(d)           except
to the extent specified to be an Assumed Liability in Section 2.4, any Liability
arising out of or relating to the Transferred Assets or the
operation or conduct of the Business to the extent that such
Liability is for, relates to, arises or accrues during any time
period prior to the Closing;


 


 




 

-6-








 






 


(e)         
except to the extent specified to be an Assumed Liability in
Section 2.4, any
Liability under or arising from any of the Transferred Contracts,
the Transferred Intellectual Property, the Transferred Leases and
the Transferred Business Licenses, in each case to the extent
payable, performable or accruing prior to the Closing, including in
all cases any such Liabilities to the extent arising from any
breach, default, violation or other form of noncompliance by Seller
or any Seller Subsidiary thereunder prior to the
Closing;


 


(f)         
any Liability arising out of or resulting from any violation or
non-compliance with any Law by Seller or any Seller
Subsidiary;


 


(g)         
all Liability under any employment, severance or termination
agreement between Seller or any Seller Subsidiary and any Business
Employee, to the extent payable, performable, arising or accruing
prior to the Closing or arising out of or in connection with the
termination of any such Business Employee by Seller prior to or
after the Closing;


 


(h)           any
Liability of Seller or the Seller Subsidiaries for any Seller
Expenses and


 


(i)           any
liability or obligation of Seller or its Affiliates with respect to
any Benefit Plan, including, but not limited to, any defined
benefit pension or Multiemployer Plan in which any of the current
or former employees or other service providers of Seller or any
Seller Subsidiary currently participate or have at any time
participated, or any other wages, compensation, option, stock
right, bonus or profit-sharing earned by such Transferred
Employees.

 


2.6           Closing.


 


(a)           At
the Closing,


 


(i)           Seller
will deliver or cause to be delivered to Buyer the various items,
certificates, instruments, and documents referred to in
Section 10.1;
and


 


(ii)         
Buyer will deliver or cause to be delivered to Seller various
items, certificates, instruments, and documents referred to in
Section 10.2.


 


(b)           The
closing (the “Closing”) of the
transactions contemplated by this Agreement shall take place at a
location or locations mutually satisfactory to the parties hereto
(or remotely via the electronic exchange of executed documents and
other closing deliverables) commencing at 9:00 a.m., Eastern
Standard Time (i) on the first Business Day following the date upon
which all of the conditions to Closing set forth in Article 8 and Article 9 have been satisfied
or waived, other than those conditions that by their nature are to
be satisfied at the Closing (but subject to the fulfillment or
waiver of such conditions at the Closing), or (ii) on such other
date as the parties may mutually agree in writing (the
“Closing
Date”).


 


 




 

-7-








 






 


2.7           Purchase
Price.

 


(a)           Purchase
Price. Subject to the terms and conditions of this
Agreement, in full consideration for Seller’s sale, transfer,
conveyance, assignment and delivery of the Transferred Assets to
Buyer, and Seller’s execution and delivery of, and its
performance of its obligations contained in, this Agreement and the
Other Agreements, at the Closing, Buyer shall (i) pay to Seller in
accordance with Section
2.7(c) the Estimated Purchase Price, subject to adjustment
after the Closing pursuant to Section 2.7(d) (the
“Purchase
Price”), and (ii) assume the Assumed Liabilities as
provided in Section
2.4; provided,
however, that the Seller
may elect to receive up to 1,000,000 shares of Common Stock of
Buyer in lieu of up to $5,000,000 in cash of the Base Purchase
Price, by giving written notice to Buyer not less than 20 calendar
days prior to the Closing (the “Election Notice”). For
the avoidance of doubt, for purposes of the foregoing, the parties
hereto agree that each share of Common Stock of Buyer shall equal
$5.00.

 


(b)           Preliminary
Closing Statement. At least five (5) Business Days prior to
the Closing Date, Seller shall prepare and deliver to Buyer an
unaudited balance sheet of the Transferred Assets and Assumed
Liabilities prepared in good faith by Seller on an estimated basis
as of the Adjustment Time (the “Estimated Closing Balance
Sheet”). Together with the Estimated Closing Balance
Sheet (and based thereon to the extent applicable), Seller shall
deliver to Buyer a statement (the “Preliminary Closing
Statement”), signed and attested to by the chief
financial officer of Seller, certifying Seller’s good faith
calculation and estimate or computation (including all calculations
in reasonable detail) of:

 


(i)           the
Net Working Capital Adjustment (the “Estimated Net Working Capital
Adjustment”), and

 


(ii)           the
Estimated Purchase Price.

 


The
Estimated Closing Balance Sheet and the Preliminary Closing
Statement, and each element of the Preliminary Closing Statement,
shall be prepared in accordance with the Accounting Principles and
be accompanied by reasonable supporting detail. Buyer shall be
entitled to comment on and request reasonable changes to the
Estimated Closing Balance Sheet or Preliminary Closing Statement,
and Seller shall provide Buyer and its representatives access to
information that Buyer reasonably requests relating to the
Estimated Closing Balance Sheet or Preliminary Closing Statement
and the preparation thereof. Seller shall consider in good faith
any changes Buyer proposes to the Preliminary Closing Statement and
revise such statement if, based on its good faith assessment, such
changes are warranted. Buyer may accept the Preliminary Closing
Statement without waiving its rights
to challenge such position pursuant to Section
2.7(d).


 


(c)           Closing
Payments; Issuance of Stock. At the Closing, Buyer shall pay
to Seller, by wire transfer of immediately available funds, to an
account designated in writing by Seller by written notice to Buyer
not less than five (5) Business Days prior to the Closing Date, an
amount equal to the Estimated Purchase Price. To the extent that
Seller has provided Buyer with the Election Notice in a timely
manner, at the Closing Buyer shall issue to Seller such amount of
shares of Common Stock of Buyer as set forth in such Election
Notice.

 


 




 

-8-








 






 


(d)           Determination
of Final Purchase Price.

 


(i)           Within
one hundred twenty (120) days after the Closing Date, Buyer shall
prepare and deliver to Seller an unaudited balance sheet of the
Transferred Assets and Assumed Liabilities prepared in good faith
by Buyer as of the Adjustment Time (the “Closing Balance Sheet”).
Together with the Closing Balance Sheet (and based thereon to the
extent applicable), Buyer shall deliver to Seller a statement (the
“Closing
Statement”) setting forth Buyer’s good faith
calculation of: (A) the Net Working Capital Adjustment, and
(B) the Final Purchase Price. The Closing Balance Sheet and Closing
Statement, and each element thereof, shall be prepared in
accordance with the Accounting Principles and be accompanied by
reasonable supporting detail.

 


(ii)           During
the thirty (30) days immediately following Seller’s receipt
of the Closing Statement (the “Closing Statement Review
Period”), Buyer shall provide Seller and its
representatives access to information that Seller reasonably
requests that Buyer used to prepare the Closing Balance Sheet and
Closing Statement.

 


(iii)           If
Seller disagrees with any of the items included in the Closing
Statement, then Seller may, on or prior to the last day of the
Closing Statement Review Period, deliver a written notice of such
disagreement to Buyer (a “Notice of Disagreement”).
To be in proper form, each disagreement contained in a Notice of
Disagreement must specify in reasonable detail the nature and
amount of such disagreement, as well as a reasonable basis therefor
and relevant supporting documentation and calculations (each
disagreement meeting the requirements of this Section 2.7(d)(iii) and
included in a timely Notice of Disagreement, a “Disputed Item”). If
Seller does not deliver a timely Notice of Disagreement meeting the
requirements of this Section 2.7(d)(iii), then
the Closing Statement delivered by Buyer pursuant to Section 2.7(d)(i) above
shall be final and binding on the parties and deemed to set forth
the Final Purchase Price. If Seller delivers a timely Notice of
Disagreement meeting the requirements of this Section 2.7(d)(iii), then
(A) during the thirty (30) day period following delivery of such
Notice of Disagreement (the “Resolution Period”),
Buyer and Seller shall seek in good faith to resolve the Disputed
Item(s); and (B) all items included in the Closing Statement with
which Seller does not in the Notice of Disagreement disagree shall
be final and binding on the parties and shall be utilized in the
computation of the Final Purchase Price. During the Resolution
Period, Seller shall provide Buyer and its representatives with
access to information that Buyer reasonably requests relating to
the Notice of Disagreement and Seller’s preparation thereof.
Notwithstanding the foregoing, Seller cannot dispute the Closing
Balance Sheet to the extent such dispute is based on methods of
depreciation, amortization or calculating inventory; provided that
such methods are consistent with the Accounting
Principles.

 


 




 

-9-








 






 


(iv)           If,
at the end of the Resolution Period, Buyer and Seller have not
resolved each Disputed Item, then Buyer and Seller shall have the
right to submit the unresolved Disputed Items to an independent
auditor for review and resolution. Such independent auditor shall,
and Buyer and Seller shall cause such independent auditor to, (A)
act as an expert and not an arbitrator, (B) make a final
determination based solely on the applicable provisions of this
Agreement (and not by independent review), (C) base its decision on
a single presentation submitted in writing by each of Buyer and
Seller and on one written response to each such presentation
(unless such independent auditor requests an additional response
from either Buyer or Seller), and not on independent investigation,
(D) with respect to each unresolved Disputed Item, render a
determination that must be within the ranges of values claimed by
each of Buyer and Seller, and (E) render a final determination as
to each Disputed Item within forty-five (45) days following the end
of the Resolution Period (the “Auditor Review Period”).
During the Auditor Review Period, each of Buyer and Seller shall
provide such independent auditor with reasonable access to
information relating to any Disputed Item. The fees and expenses of
such independent auditor shall be borne by Seller, on the one hand,
and Buyer, on the other hand, in the same proportion that the
aggregate amount of the items unsuccessfully disputed by each (as
finally determined by such independent auditor) bears to the
aggregate amount of the Disputed Items submitted to such
independent auditor for review and resolution.

 


(v)           The
final determination as to each Disputed Item as determined by such
independent auditor shall be final and binding on the parties
hereto, absent a showing of fraud or willful misconduct, and shall
be utilized in the computation of the Final Purchase
Price.

 


(e)           Adjustment
to Estimated Purchase Price.

 


(i)           If
the Final Purchase Price is greater than the Estimated Purchase
Price, then Buyer shall pay to Seller an amount equal to such
excess within five (5) Business Days of the final determination of
such amount, by wire transfer of immediately available funds to an
account designated in writing by Seller.

 


(ii)           If
the Final Purchase Price is less than the Estimated Purchase Price,
then Seller shall pay to Buyer an amount equal to such shortfall
within five (5) Business Days of the determination of the Final
Purchase Price.

 


(iii)           For
the avoidance of doubt, any payment made under this Section 2.7(e) shall
constitute an adjustment to the Purchase Price.

 


2.8           Prorations.
With respect to accrued utility and similar payments arising from
the ownership or use of the Transferred Assets, the Assumed
Liabilities and the operation of the Business, the accrued rents
and other payments under the Transferred Leases, the Transferred
Intellectual Property and the Transferred Contracts and similar
accrued items all as relating to a period after and including the
Closing Date, Buyer shall be responsible for the pro rata portion
thereof based upon the number of days in such period following
(but, for the avoidance of doubt, not including) the Closing Date
as a percentage of the total number of days in such
period.


 




 

-10-








 






 


2.9           Allocation
of Purchase Price. The Purchase
Price and the Assumed Liabilities shall be allocated for Tax
purposes among the Transferred Assets as set forth on the
Allocation Statement which shall be attached hereto as Exhibit D at the Closing. No
later than 90 days after the Closing Date, Seller shall cause to be
prepared and delivered to Buyer a proposed allocation of the
Purchase Price allocable to the Transferred Assets in the form
attached hereto as Exhibit
D plus the Assumed Liabilities among the Transferred Assets,
which allocation shall be in accordance with Treasury Regulations
Section 1.1060-1 (the “Allocation Statement”).
If Buyer disagrees with Seller’s proposed Allocation
Statement, Buyer may, within 30 days after delivery of such
Allocation Statement, deliver a notice to Seller stating that Buyer
disagrees with such Allocation Statement and specifying in
reasonable detail those items or amounts as to which Buyer
disagrees and the basis therefor. If Buyer does not timely deliver
a notice of disagreement, then Seller’s proposed Allocation
Statement shall be final and binding upon Seller and Buyer. If
Buyer timely delivers a notice of disagreement, Seller and Buyer
shall, during the 30 days following such delivery, use their
commercially reasonable efforts to reach agreement on the disputed
items or amounts. If, during such period, Seller and Buyer are
unable to reach such agreement, they shall promptly thereafter
cause such independent auditor to review the remaining disputed
items (such items, the “Disputed Allocation
Items”), and such review shall be final and binding
upon Seller and Buyer. The fees and expenses of such independent
auditor shall be allocated between Seller and Buyer in such manner
that Buyer shall be responsible for that portion of the fees and
expenses equal to such fees and expenses multiplied by a fraction
the numerator of which is the aggregate dollar value of Disputed
Allocation Items submitted to such independent auditor that are
resolved in a manner further from the position submitted to such
independent auditor by Buyer and closer to the position submitted
to such independent auditor by Seller (as finally determined by
such independent auditor), and the denominator of which is the
total aggregate dollar value of the Disputed Items so submitted,
and Seller shall be responsible for the remainder of such fees and
expenses. Thereafter, Seller shall prepare and deliver to Buyer
from time to time a revised proposed Allocation Statement updated
to reflect any adjustments to the Purchase Price pursuant to this
Agreement requiring any adjustment to the Allocation Statement.
Such revised allocation statement shall become the Allocation
Statement subject to review and dispute resolution rights allowable
to the initial proposed Allocation Statement delivered to Seller
pursuant to this Section
2.9. The parties hereto shall file, or cause to be filed,
all federal income Tax Returns (including Internal Revenue Service
Form 8594) in a manner consistent with the Allocation Statement as
finally determined pursuant to this Section 2.9 and shall take
no actions for Tax purposes inconsistent therewith, except, in each
case, as required pursuant to a “determination” within
the meaning of Section 1313 of the Code (or any other similar
provision of Law).


 


2.10           Title
and Risk. Title to the
Transferred Assets shall not pass until Closing. Seller and the
Seller Subsidiaries shall continue to carry on the Business for
their own benefit and at their own risk up to Closing. The
Transferred Assets shall be at the risk of Buyer from
Closing.


 


 

ARTICLE 3



REPRESENTATIONS AND WARRANTIES OF SELLER


 


Founder
and Seller hereby, jointly and severally, represent and warrant to
Buyer, as of the date of this Agreement and the Closing Date only,
as follows; provided, however, that the
representations and warranties of this Article 3 shall be qualified by
any exceptions disclosed in the Disclosure Schedule corresponding
to an enumerated Section of this Article 3 (collectively, the
“Disclosure
Schedule”), and to any other Section of this
Article 3 to which
its relevance is reasonably apparent on the face of such
disclosure.


 


 




 

-11-








 






 


3.1           Status
of Seller and the Seller Subsidiaries. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida, and shall remain
so until one (1) year after the Closing Date. Each of Seller and
the Seller Subsidiaries has full corporate, company or partnership
power and authority to enable it to own, lease or otherwise hold
the Transferred Assets owned, leased or otherwise held by it and to
conduct the Business as presently conducted by it. Each of Seller
and each of the Seller Subsidiaries is qualified to do business and
is in good standing (to the extent the concept of good standing is
applicable in a particular jurisdiction) in all jurisdictions in
which the character of the properties owned, leased, or operated by
it or the nature of the Business makes such qualification
necessary, except where such failure would not reasonably be
expected to have a Material Adverse Effect. Section 3.1 of the Disclosure
Schedule lists each subsidiary of Seller. Founder holds
ninety-percent (90%) of the issued and outstanding equity interests
of Seller. Steve Lewis (“Lewis”) holds ten-percent
(10%) of the issued and outstanding equity interests of Seller.
Founder and Lewis, collectively, own all of the equity interests of
Seller. There are no outstanding options or warrants for the
purchase or issuance of any equity interest of Seller.


 


3.2           Authorization;
No Conflicts.


 


(a)           Seller
has the right, power, and authority to enter into this Agreement
and the Other Agreements to which it is a party, to consummate the
transactions contemplated hereby and thereby, and otherwise to
comply with and perform its obligations under, this Agreement and
the Other Agreements. Each of the Seller Subsidiaries has the
right, power, and authority to execute, deliver and perform the
Other Agreements to which it is or will be, a party and to perform
its obligations thereunder and consummate the transactions
contemplated to be performed and consummated by this Agreement and
such Other Agreements.


 


(b)           The
execution and delivery by Seller of this Agreement do not, the
execution and delivery by Seller and each of the Seller
Subsidiaries of each Other Agreement to which it is, or will be, a
party will not, and the consummation of the transactions
contemplated to be consummated by it by this Agreement and such
Other Agreements will not conflict with, or result in any breach of
or constitute a default under (or an event that, with notice or
lapse of time or both, would become a default), require any consent of any Person
pursuant to, or give to others any
rights of termination, acceleration or cancellation under, allow
the imposition of any fees or penalties, require the offering or
making of any payment or redemption, or result in the creation of
any Lien (other than
Permitted Encumbrances or Liens
caused by Buyer) upon any of
the Transferred Assets under, any
provision of (i) in the case of Seller, its certificate of incorporation or bylaws and,
in the case of each of the Seller Subsidiaries, its comparable organizational documents, (ii)
any Contract (including
any Transferred
Contract) to which Seller
or any of the Seller
Subsidiaries is a party or by which
any of the Transferred Assets or Assumed Liabilities is bound, or (iii) any injunction,
judgment, Order or decree or
statute, Law, ordinance,
legally-binding rule, executive order, code or regulation
applicable to Seller or any of
the Seller Subsidiaries or any
of the Transferred Assets or Assumed Liabilities, except as set forth on Section 3.2(b) of
the Disclosure
Schedule. No consent,
Permit, authorization or approval of,
or registration, declaration, notice or filing with, any
Governmental Authority, is required to
be obtained or made by or with respect to Seller
or any of the Seller
Subsidiaries in connection with the
execution, delivery and performance of this Agreement
or any of the Other Agreements
or the consummation of the
Acquisition and the other transactions
contemplated hereby and by the Other Agreements, other than (A) compliance with and filings under
applicable Antitrust Laws, (B)
those that may be required solely by reason of
Buyer’s (as opposed to any other
third party’s) participation in the Acquisition
and the other transactions
contemplated hereby and by the Other Agreements, and (C) those the failure of which to obtain or
make would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.


 


 




 

-12-








 






 


(c)           Seller
has duly executed and delivered
this Agreement and on or prior
to the Closing will have duly
executed and delivered each Other Agreement to which it is, or will be, a party, and this Agreement
constitutes, and each Other
Agreement to which it is, or
will be, a party will
after the Closing constitute, its legal, valid and binding
obligation, enforceable against it in accordance with their
terms, except to the extent that such enforceability may be
limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium, rehabilitation or similar
Laws relating to the enforcement of creditors’ rights
generally, (ii) the availability of the remedies of specific
performance or injunctive relief which may be subject to the
discretion of the court before which any Proceeding for such
remedies may be brought, or (iii) the exercise by any court of
its discretion in invoking general principles of equity (the
“Equitable
Exceptions”). Each of
the Seller Subsidiaries on or
prior to the Closing will have
duly executed and delivered each Other Agreement
to which it is, or will
be, a party, and each Other
Agreement to which it is, or
will be, a party will
after the Closing constitute its legal, valid and binding
obligation, enforceable against it in accordance with its terms,
except to the extent that such enforceability may be limited by
the Equitable Exceptions.


 


3.3           Financial
Matters.


 


(a)           Financial
Statements. To the Knowledge of Seller, Section 3.3(a) of the Disclosure
Schedule sets forth true, complete and correct unaudited and
consolidated balance sheet and profits and losses statement of
Seller and Seller Subsidiaries (including any related notes and
schedules) as of (i) December 31, 2016 and December 31, 2017, and
(ii) for the nine-month period ended September 30, 2018 (such
balance sheet and statement of profits and losses of the Seller and
Seller Subsidiaries set forth above in clauses (i) and ii) are
referred to collectively as the “Financial Statements”).
The Financial Statements (including the notes thereto, if any) have
been prepared from, and are consistent with, the books and records
of Seller, and fairly present the financial condition and results
of operation of Seller as of the date thereof, and have been
prepared in accordance with the Accounting Principles. Since
January 1, 2018, there has been no change in any of the accounting
(and Tax accounting) policies, practices or procedures of Seller.
Seller has established and adheres to a system of internal
accounting controls that are designed to provide reasonable
assurance regarding the reliability of financial reporting. Seller
does not have any Liability that is within the definition of
Assumed Liabilities, except for (a) Liabilities set forth on the
Financial Statements, or (b) Liabilities that have arisen in the
Ordinary Course of Business and are not material in
amount.


 


(b)           Indebtedness.
Section 3.3(b) of the
Disclosure Schedule sets forth a list of all Indebtedness of
Seller as of the date of this Agreement and identifies for each
item of Indebtedness the outstanding principal and accrued but
unpaid interest as of the date of this Agreement.

 


3.4           Taxes.
Except as set forth in Section 3.4 of the Disclosure
Schedule:

 


(a)           Seller
has duly filed or caused to be filed with the appropriate Taxing
Authority (taking into account all available extensions) all income
and other material Tax Returns that are required to be filed by it,
and all such Tax Returns are true, accurate and complete in all
material respects.

 


 




 

-13-








 






 


(b)           There
are no Liens for Taxes upon any of the Transferred Assets or the
Business, other than Permitted Encumbrances.

 


(c)           Seller
has paid or caused to be paid all Taxes shown as due on Tax Returns
filed by it.

 


(d)           There
is no currently outstanding written dispute, deficiency, claim,
audit or other administrative or judicial proceeding relating to
any Tax or Tax Return of Seller, and Seller has not received
written notice regarding the potential commencement of any such
proceeding.

 


(e)           No
written claim has ever been made by a Taxing Authority in a
jurisdiction where Seller does not file Tax Returns that Seller is
or may be subject to taxation by that jurisdiction. Except as set
forth in Section 3.4(e) of
the Disclosure Schedule, , Seller has never been a resident
for Tax purposes in a country other than the United States, or
otherwise had a branch, permanent establishment, or taxable
presence outside the United States.

 


(f)           Seller
has duly and timely collected all amounts that Seller reasonably
believed collectible on account of any sales or transfer Taxes,
including goods and services, harmonized sales, value added, and
state, provincial, or territorial sales Taxes, required by
applicable Laws to be collected by it and has duly and timely
remitted to the appropriate Taxing Authority any such amounts
required by applicable Laws to be remitted by it.

 


(g)           Seller
has been a validly electing S corporation within the meaning of
Sections 1361 and 1362 of the Code since its formation. Buyer shall
not be liable for any Tax under Section 1374 of the Code in
connection with the sale of Seller’s assets.

 


3.5           Real
and Personal Property.


 


(a)           Personal
Property. Except as set forth on Section 3.5(b) of the Disclosure
Schedule, Seller and each Seller Subsidiary owns (free and
clear of all Liens and Claims, other than Permitted Encumbrances),
all tangible personal property owned by it. Upon consummation of
the Acquisition, Buyer will acquire good and valid title to the
Transferred Assets, in each case free and clear of all
Liens.

 


(b)           Sufficiency
of Assets. Except as set forth on Section 3.5(b) of the Disclosure
Schedule, the Transferred Assets, (i) constitute all of the
assets, properties and rights owned, leased or licensed by Seller
or the Seller Subsidiaries used or held for use for or in
connection with the operation or conduct of the Business as
currently conducted, and (ii) are sufficient and constitute all of
the assets, properties and rights necessary for the operation and
conduct of the Business by Buyer immediately following the Closing
in substantially the same manner as currently conducted by Seller
and the Seller Subsidiaries.

 


(c)           Defects.
All Personal Property included in the Transferred Assets is free
from material defects to the Knowledge of Seller, has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to reasonable wear and
tear) and is suitable for the purposes for which it is presently
used.

 


 




 

-14-








 






 


(d)           Availability
of Property. Immediately following the Closing, all of the
assets, properties and rights included in the Transferred Assets
will be owned, leased, licensed or otherwise available for use by
Buyer on terms and conditions identical or substantially identical
to those under which Seller and the Seller Subsidiaries currently
own, lease, license or use or hold available for use such assets,
properties and rights. Other than personal property of employees of
the type customarily brought into the office by employees (such as
furniture, art, and personal mobile phones), no Person other than
Seller or the Seller Subsidiaries owns or has leased any personal
property situated on any of the Transferred Leases.

 


(e)           Real
Property; Transferred Leases. Seller and the Seller
Subsidiaries do not own any real property. Except for the
Transferred Leases, neither Seller nor Seller Subsidiaries lease
any real property. Seller or the applicable Seller Subsidiary holds
a valid, subsisting and enforceable leasehold interest under the
Transferred Leases, and such Transferred Lease constitutes a legal, valid and binding obligation,
enforceable against Seller or
such applicable Seller Subsidiary in accordance with its terms, except to the extent
that such enforceability may be limited by the Equitable
Exceptions. Neither Seller nor
any of the Seller Subsidiaries subleases or otherwise permits the
occupancy by any third party of all or any portion of the
Transferred Leases. Seller has made available to Buyer a true and
complete copy of each Transferred Lease (including all amendments,
modifications and supplements thereto).


 


3.6           Intellectual
Property and Technology.


 


(a)           Section
2.2(e) or Section 2.2(f) of the Disclosure Schedule contains
a true and complete list of: (i) all Transferred Registered IP that
is owned by or filed in the name of Seller or a Seller Subsidiary,
specifying as to each item, as applicable: (A) the nature of the
item, including the title of the item, (B) the owner of the item,
(C) the jurisdictions in which the item is issued or registered or
in which an application for issuance or registration has been
filed, and (D) the issuance, registration or application numbers
and dates; (ii) all Transferred Intellectual Property, including a
description thereof; (iii) a list and version number, if
applicable, of all Software used in connection with the Business;
and (iv) all licenses and other similar agreements and permissions
(provided, that
Section 2.3(f) of the
Disclosure Schedule need not list any Off-the-Shelf Software
Licenses, but such Off-the-Shelf Software Licenses shall be
included in the definition of Business IP Licenses) under which
Seller or any Seller Subsidiary is a licensee or otherwise is
authorized to distribute, use or practice in connection with or in
support of the Business any Intellectual Property owned by a third
party (such licenses and other similar agreements and permissions,
collectively, “Business IP Licenses”).
Section 2.2(f) of the
Disclosure Schedule separately lists all third party
components included or embedded in, or distributed or licensed
with, the Business Proprietary Software.

 


(b)           Seller
or a Seller Subsidiary owns and possesses all right, title and
interest in and to the Owned Business IP and has sufficient rights
pursuant to a valid and enforceable Business IP License to, all
other Transferred Intellectual Property used in, held for use in,
or necessary for the operation of, the Business as currently
conducted and as currently proposed to be conducted, in each case
free and clear of all Liens, other than Permitted Encumbrances.
Seller has not received any written or, to the Knowledge of Seller,
oral notice or claim challenging the ownership or validity of any
Owned Business IP or asserting that any other Person has any claim
of legal or beneficial ownership or exclusive rights with respect
thereto, nor, to the Knowledge of Seller, is there a reasonable
basis for any such notice or claim. Seller or a Seller Subsidiary
has complied in all material respects with the terms and conditions
of each of the Business IP Licenses; Seller has not received any
written or, to the Knowledge of Seller, other notice from any
Person asserting a breach of, termination, or non-renewal (or
intent to terminate or not renew) any of the Business IP
Licenses.

 


 




 

-15-








 






 


(c)           Except
as set forth in Section
3.6(c) of the Disclosure Schedule, there are no restrictions
on Seller’s or any Seller Subsidiary’s use, release,
sale, disclosure, communication or modification of the Owned
Business IP. Seller or the Seller Subsidiaries have complied in all
material respects with any settlement agreements or Orders relating
to their use of, or agreement not to use, any Transferred
Intellectual Property.

 


(d)           Assuming
the consents set forth on Section 3.6(d) of the Disclosure
Schedule are obtained, consummation of the Acquisition will
not result in the loss or impairment of the rights of Seller or any
Seller Subsidiary to own or use any of the Owned Business IP or use
any Intellectual Property included in the Transferred Intellectual
Property which Seller or any Seller Subsidiary uses pursuant to a
Business IP License; and neither Seller nor any Seller Subsidiary
has not violated, and as a result of the execution and delivery of
this Agreement or the performance of its obligations hereunder will
not violate, any Business IP License.

 


(e)           To
the Knowledge of Seller, the operation of the Business does not
infringe, misappropriate, dilute or otherwise violate, and has not,
infringed, misappropriated, diluted or otherwise violated, any
Intellectual Property of any Person; and neither Seller nor any
Seller Subsidiary has received any written notice regarding the
foregoing (including any demand or request that Seller or any
Seller Subsidiary license any rights from a third party or customer
requests for indemnity), nor, to the Knowledge of Seller, is there
a reasonable basis for any such notice or claim. To the Knowledge
of Seller, no Person has infringed, misappropriated, diluted or
otherwise violated any of the Owned Business IP. Neither Seller nor
any Seller Subsidiary has received any written or, to the Knowledge
of Seller, oral request for indemnification or notice that any
Person believes it may have an indemnification claim against Seller
or any Seller Subsidiary related to any Transferred Registered IP
and, to the Knowledge of Seller, no basis exists for any such
claim.

 


(f)           Each
Person who has participated in the conception, creation, or
development of any Owned Business IP has executed and delivered to
Seller or a Seller Subsidiary a valid and enforceable Contract
providing for the present assignment by such Person to Seller of
all such Owned Business IP.

 


(g)           Seller
or the Seller Subsidiaries have taken all steps they reasonably
believe under the circumstances protect, preserve and maintain in
confidence all Owned Business IP that constitutes, or that Seller
or a Seller Subsidiary intended to retain as, a material Trade
Secret. To the Knowledge of Seller, no such Trade Secrets have been
disclosed or authorized to be disclosed to any Person not subject
to a written confidentiality agreement or to an employee of Seller
or a Seller Subsidiary who is not required to maintain the
confidentiality of such Trade Secrets under Seller’s or any
Seller Subsidiary’s employment policies.

 


 




 

-16-








 






 


(h)           To
the Knowledge of Seller, there has been no actual or alleged theft,
breach of security, or unauthorized use, disclosure, access or
intrusions of any Trade Secrets of the Business.

 


(i)           Section
3.6(i) of the Disclosure Schedule sets forth a complete and
accurate list of all Open Source Software (and the applicable
license) incorporated into any Software or product that is licensed
or distributed by Seller or any Seller Subsidiary to customers of
the Business. None of the Business Proprietary Software or any
other Software used, licensed or distributed by the Business
requires any Transferred Intellectual Property be disclosed or
distributed in source code form or for free to recipients, or
requires Seller or any Seller Subsidiary to permit recipients to
modify, make derivative works of, reverse engineer, or redistribute
any Business Proprietary Software. Seller and the Seller
Subsidiaries are in compliance with and has complied with all
restrictions and other terms set forth in any Business IP License
pursuant to which Seller or any Seller Subsidiaries uses any Open
Source Software.

 


(j)           The
source code to the Business Proprietary Software contains source
comments and/or its associated documentation is sufficiently
detailed, and contains such supporting information as would allow a
relevantly skilled IT professional to: (i) assemble, compile,
debug, support and improve the source code of such Software and
(ii) use, maintain, adapt and enhance all applications currently
provided to the public as part of the Business. To the Knowledge of
Seller, the Business Proprietary Software does not contain any
virus, Trojan horse, worm, time bomb, trap door, disabling device,
or other harmful code that may cause the unauthorized destruction
or corruption of Software or data.

 


(k)           Except
as set forth in Section
3.6 of the Disclosure Schedule, no Seller or Seller
Subsidiary has ever deposited or agreed to deposit any source code
of any Business Proprietary Software in a source code escrow
account, nor has it ever delivered or agreed to deliver or make
available to any Person any source code.


 


3.7           Material
Contracts.


 


(a)           Section
3.7(a) of the Disclosure Schedule sets forth a true,
complete and correct list of all of the following material
Contracts to which Seller or a Seller Subsidiary is a party or by
which Seller or a Seller Subsidiary is bound (except for purchase
orders) that is in full force and effect as of the date hereof
(each a “Material
Contract”):


 


(i)           any
Transferred Contract or group of related Transferred Contracts
providing for (A) payment by any Person to Seller or any Seller
Subsidiary in excess of $50,000 annually or (B) the purchase of
products or services by Seller or any Seller Subsidiary from any
Person in excess of $50,000 annually;

 


(ii)           any
Transferred Contract that limits or
purports to limit the ability of the Business or any Person to compete in any line of business or with
any Person or in any geographic
area or during any period of time, or that restricts the right of
the Seller, any Seller
Subsidiary or any Person
to sell to or purchase from any
Person or to hire any
Person, or that grants the other party
or any third Person “most
favored nation” status or any type of special discount
rights; and


 


 




 

-17-








 






 


(iii)           any
Transferred Contract that requires a
consent of or notice to a third Person in connection with the consummation of the
Acquisition and the other transactions
contemplated hereby and by the Other Agreements.


 


(iv)           any
Transferred Contract that involves non-cancelable commitments to
make capital expenditures or relating to the construction of fixed
assets in excess of $100,000 annually;


 


(v)           any
Transferred Contract under which Seller or any Seller Subsidiary is
a (A) lessee of or holds or operates any personal property, owned
by a third party or (B) lessor of or permits any third party to
hold or operate any personal property owned or controlled by Seller
or any Seller Subsidiary;


 


(vi)           any
license, royalty, indemnification, covenant not to sue, concurrent
use, consent to use or other Transferred Contract relating to any
Intellectual Property (including any Transferred Contracts relating
to the licensing of Intellectual Property by Seller or any Seller
Subsidiary to a third party or by a third party to Seller or any
Seller Subsidiary or the sale or acquisition of Intellectual
Property by Seller or any Seller Subsidiary) and any other
Transferred Contracts affecting Seller’s or any Seller
Subsidiary’s ability to own, enforce, use, license, or
disclose any Intellectual Property, in each case other than
Off-the-Shelf Software Licenses;


 


(vii)           any
agent, sales representative, consultant, dealer, reseller,
referral, marketing, alliance partner, sales, distribution
agreement or other similar Transferred Contract;


 


(viii)         
any Transferred Contract that (A) contains “most favored
nations” pricing terms or grants to any customer or other
Person any right of first offer or right of first refusal or
exclusivity, or (B) contains any “non-solicitation”,
“no hire”, “standstill”,
“exclusivity” or similar provisions which restrict
Seller from soliciting, hiring, engaging, retaining or employing
any other Person’s current or former employees;


 


(ix)           any
Transferred Contract that (A) does not expressly cap the Liability
thereunder of Seller or any Seller Subsidiary or (B) expressly
permits special, consequential or punitive damages against Seller
or any Seller Subsidiary;


 


(x)           any
Transferred Contract with a Person located outside of the United
States or any Contract requiring work to be performed by Seller or
any Seller Subsidiary outside of the United States;


 


(xi)           any
settlement, conciliation or similar agreement entered into in the
past three (3) years or under which there are continuing
obligations or Liabilities on the part of Seller or any Seller
Subsidiary;


 


(xii)           any
Transferred Contract pursuant to which Seller or any Seller
Subsidiary subcontracts work to a third party;


 


 




 

-18-








 






 


(xiii)                      any
Transferred Contract with any Material Customer or any Material
Vendor;


 


(xiv)                      any
Transferred Contract (or group of related Transferred Contracts)
that is material to the operation of the Business and is not
otherwise required to be disclosed pursuant to any of the
foregoing; or


 


(xv)           any
commitment or arrangement to enter into any of the
foregoing.


 


(b)           Except
as set forth on Section 3.7(b) of the Disclosure
Schedule: (i) Each of the Material Contracts is in full
force and effect and constitutes a valid, binding and enforceable
obligation of the Seller or the Seller Subsidiary and, to the
Knowledge of Seller, the other parties thereto, (ii) neither Seller
nor any Seller Subsidiary is or, to the Knowledge of Seller, is
Seller or any Seller Subsidiary alleged to be in breach of or
default in any material respect under any Transferred Contract,
(iii) to the Knowledge of Seller, no counterparty is in breach of
or default in any Transferred Contract; (iv) each of the
Transferred Contracts is freely and fully assignable to Buyer
without penalties and other adverse consequences; and (v) upon
consummation of the Acquisition, each Transferred Contract shall
continue in full force and effect. Seller has provided (A) a true,
complete and correct copy of each Transferred Contract, together
with all amendments, waivers or other changes thereto and (B) a
true, complete and correct description of the terms and conditions
of each oral Material Contract. Neither Seller nor any Seller
Subsidiary has any Liability under any Transferred Contract with a
customer of the Business except for obligations to perform any
ongoing or future services, provide products, work product or other
deliverables or make payments, in each case, in the Ordinary Course
of Business and as provided in such Contract. Neither Seller nor
any Seller Subsidiary has waived any material rights under any
Transferred Contract. To the Knowledge of Seller, no event has
occurred which either entitles, or would, with notice or lapse of
time or both, entitle any counterparty to any Transferred Contract
to declare a breach, default or violation under, or make an
indemnification claim against Seller with respect to, such
Transferred Contract or to terminate, modify or accelerate any
terms of such Contract. Neither Seller nor any Seller Subsidiary
has received written notice of an intention by any party to any
Transferred Contract that provides for a continuing obligation by
any party thereto on the date hereof to terminate such Transferred
Contract or amend the terms thereof, other than modifications in
the Ordinary Course of Business.

 


3.8           General
Employee Matters; Benefit Plans and
Benefits.


 


(a)           Employment
Laws/Labor Matters.


 


(i)           Seller
and the Seller Subsidiaries are in compliance with applicable Laws
regarding employment and employment practices, terms and conditions
of employment and wages and hours, including but not limited to
those relating to discrimination, harassment, retaliation, hours of
work, compensation, payment of wages and overtime, meal and rest
periods, employment, termination of employment, employee benefits,
and notice and severance obligations (the “Labor Laws”). Seller and
the Seller Subsidiaries are not party to any collective bargaining
agreement covering the Business Employees and the Seller
Subsidiaries are not engaged in collective bargaining. There is no
labor strike or dispute, slowdown or stoppage actually pending or,
to the Knowledge of Seller, threatened, against or involving Seller
or any Seller Subsidiary. Section 3.8(a)(i) of the Disclosure
Schedule lists all material Employment
Agreements.

 


 




 

-19-








 






 


(ii)           Section
3.8(a)(ii) of the Disclosure Schedule sets forth a complete
and accurate list of (i) all Business Employees and consultants or
independent contractors employed or otherwise engaged by Seller or
any Seller Subsidiary and the country and state in which the
individual normally works, (ii) the position, job description, date
of hire, current annual rate of compensation (or with respect to
such employees, consultants or independent contractors compensated
on an hourly or per diem basis, the hourly or per diem rate of
compensation), including any bonus, contingent or deferred
compensation, commission, and estimated or target annual incentive
compensation of each such person, (iii) the exempt or non-exempt
classification of such person under the Fair Labor Standards Act
and any other applicable Law regarding the payment of wages, and
(iv) the current total annual compensation of each such person
(including any bonus, contingent or deferred
compensation).

 


(iii)           Section
3.8(a)(iii) of the Disclosure Schedule sets forth a list of
all payments to any Business Employee or independent contractor or
consultant engaged by Seller or any Seller Subsidiary owing or
arising at, prior to or following the Closing from or as a result
of the consummation of the Acquisition, including any payments for
stock appreciation or similar rights, any severance or bonus plan
or payment, or any similar payment including the amount of each
such payment. Except as set forth on Section 3.8(a)(iii) of the Disclosure
Schedule, neither Seller nor any Seller Subsidiary has made
any binding commitment (whether written or verbal) to any Business
Employee or consultants or independent contractors engaged by
Seller or any Seller Subsidiary with respect to compensation,
benefits, promotion, retention, termination, severance, policies,
change in control, other terms and conditions of employment or
similar matters in connection with the Acquisition.

 


(iv)           To
the Knowledge of Seller, no Business Employee is in violation of
any term of any employment contract, patent disclosure agreement,
non-competition agreement, or any restrictive covenant to a former
employer relating to such employee's employment with Seller or any
Seller Subsidiary because of the nature of the business conducted
or presently proposed to be conducted by Seller or any Seller
Subsidiary or to the use of Trade Secrets or proprietary
information of others. No Business Employee is currently subject to
any disciplinary proceedings.

 


(v)           To
the Knowledge of Seller, neither Seller nor any Seller Subsidiary
has discharged, demoted, suspended, threatened, harassed or in any
other manner discriminated against any employee who performed
services on behalf of Seller or any Seller Subsidiary who had
previously submitted to his or her supervisor or anyone else in a
position of authority with such Seller any written or oral
complaint, concern or allegation regarding any alleged unlawful or
unethical conduct by such Seller or Seller Subsidiary or their
respective employees. There are no pending or, to the Knowledge of
Seller, threatened charges (by any employee, his or her
representatives or Governmental Authorities) of unfair labor
practices or of employment discrimination or of any other wrongful
action with respect to any aspect of employment of any person
employed or formerly employed by Seller or any Seller
Subsidiary.

 


 




 

-20-








 






 


(vi)           Seller
and each Seller Subsidiary has paid all wages, salaries, wage
premiums, bonuses, commissions, fees, and other compensation due
and payable to the Business Employees and all contractors or
independent contractors performing services on behalf of the Seller
or any Seller Subsidiary pursuant to applicable Law, Contract or
policy.

 


(b)           Benefit
Plans and Benefits.


 


(i)           Section 3.8(b)
of the Disclosure Schedule lists all Benefit Plans. Seller
has made available to Buyer a true and complete copy of each such
Benefit Plan (and any amendments thereto). Except as set forth on
Section 3.8(b) of the
Disclosure Schedule, no Benefit Plan is subject to Section
412 of the Code or Section 302 or Title IV of ERISA or is a
Multiemployer Plan. To the Knowledge of Seller, each of the Benefit
Plans has been maintained and administered in all material respects
in accordance with its terms and in compliance in all material
respects with applicable Laws including but not limited to ERISA
and the Code. All payments and contributions required to have been
made with respect to all Benefit Plans, for all periods prior to
the Closing Date, either have been made or properly accrued in
accordance with the terms of the applicable Benefit Plan and
applicable Law. To the Knowledge of Seller, each Benefit Plan
intended to be qualified under Section 401(a) of the Code is so
qualified and has received a favorable determination or approval
letter from the IRS with respect to such qualification, or may rely
on an opinion letter issued by the IRS with respect to a prototype
plan adopted in accordance with the requirements for such reliance,
or has time remaining for an application to the IRS for a
determination of the qualified status of such Benefit Plan for any
period for which such Benefit Plan would not otherwise be covered
by an IRS determination and no event or omission has occurred that
would cause any Benefit Plan to lose such
qualification.

 


(ii)           To
the Knowledge of Seller, each Benefit Plan that constitutes in any
part a nonqualified deferred compensation plan within the meaning
of Section 409A of the Code has been operated and maintained in
operational and documentary compliance with Section 409A of the
Code and applicable guidance thereunder. No payment to be made
under any Benefit Plan is, or to the Knowledge of Seller, will be,
subject to the penalties of Section 409A(a)(1) of the
Code.

 


(iii)           Neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby could (either alone or in
conjunction with any other event) (i) result in, or cause the
accelerated vesting payment, funding or delivery of, or increase
the amount or value of, any payment or benefit to any employee,
officer, director or other service provider of Seller or any Seller
Subsidiary; (ii) result in any “parachute payment” as
defined in Section 280G(b)(2) of the Code (whether or not such
payment is considered to be reasonable compensation for services
rendered); or (iii) result in a requirement to pay any tax
“gross-up” or similar “make-whole” payments
to any employee, director or consultant of Seller or any Seller
Subsidiary.

 


(iv)           None
of the Benefit Plans provides health care or any other non-pension
benefits to any employee of Seller or Seller Subsidiary after their
employment is terminated (other than as required by Part 6 of
Subtitle B of Title I of ERISA or similar state law) and, to the
Knowledge of Seller, neither Seller nor any Seller Subsidiary has
ever promised to provide such post-termination
benefits.

 


 


 




 

-21-








 






 


3.9           Litigation
and Other Proceedings.


 


(a)           Except
as set forth on Section
3.9(a) of the Disclosure Schedule, there is not currently
any Proceeding pending or, to the Knowledge of Seller, threatened
against Seller or any Seller Subsidiary. To the Knowledge of Seller, there is no fact or circumstance that
individually or in the aggregate is reasonably likely to result in
a material Proceeding becoming
pending or threatened against Seller or any Seller Subsidiary or affecting any of the Transferred
Assets, the Assumed
Liabilities, the Business
Employees or the
Business.

 


(b)           Except
as set forth on Section 3.9(b) of
the Disclosure
Schedule there is not currently
any Order outstanding
against Seller or any
Seller Subsidiary.


 


(c)           Except
as set forth on Section 3.9(c) of
the Disclosure
Schedule, Seller
and the Seller Subsidiaries
have not commenced, and do not have
pending, any Proceeding against
any Person.


 


3.10           Compliance
with Laws.


 


(a)           Generally.
Except as set forth on Section 3.10(a) of the Disclosure
Schedule, other than in respect of the Excluded Assets or
the Retained Liabilities, Seller and the Seller Subsidiaries are in
substantial compliance with all material applicable Laws and the
ownership or use of the Transferred Assets and Assumed Liabilities.
Neither Seller nor any Seller Subsidiary has ever received any
written notice of, or been charged with, the violation of any
applicable Law.


 


(b)           Permits.
Section 3.10(b) of the
Disclosure Schedule lists all Permits of Seller and the
Seller Subsidiaries. Each Permit listed on Section 3.10(b) of the Disclosure
Schedule is in full force and effect and Seller and the
Seller Subsidiaries, as applicable, are not in material violation
of or material default under any such Permit.


 


3.11           Environmental
Matters. Except as set
forth on Section 3.11 of
the Disclosure Schedule: (a) neither Seller nor any Seller
Subsidiary has ever received any written notice from any
Governmental Authority or any other Person alleging that Seller or
a Seller Subsidiary has liability arising under, or is not in
compliance with, any Environmental Law; (b) Seller or a Seller
Subsidiary has obtained all material Permits required under
Environmental Laws; (c) there is no pending or, to Seller’s
Knowledge, threatened Proceeding by any Governmental Authority
arising under or pursuant to any Environmental Law and (d) to
Seller’s Knowledge, there is, and has been, no treatment,
storage, manufacturing, transportation, handling, disposal,
arranging for or permitting the disposal of, exposure of any Person
to, or Release of Hazardous Substances, including by Seller or any
Seller Subsidiary, at, under, on or from any property, any real
property previously primarily used, occupied or held for
use.


 


3.12           Brokers
and Commissions. Except as set
forth on Section 3.12 of
the Disclosure Schedule, no Person is entitled to or, to the
Knowledge of Seller, has asserted a right to, any commission or
broker’s or finder’s fee in connection with the
transactions contemplated by this Agreement.


 


 




 

-22-








 






 


3.13           Customers.
Section 3.13 of the Disclosure Schedule sets forth a true, correct
and compete list of (a) the Business Customers (each, a
“Material
Customer”, and collectively, the “Material Customers”),
showing the approximate total Business-related sales to each such
Business Customer during the applicable period. No Material
Customer has (x) canceled or otherwise terminated, or, to the
Knowledge of Seller, threatened to cancel or terminate, its
relationship with Seller or any Seller Subsidiary, or
(y) decreased or limited materially or, to the Knowledge of
Seller, threatened to decrease or limit materially, its business
with Seller or any Seller Subsidiary or indicated any intent to
modify materially its relationship with Seller or any Seller
Subsidiary. No Material Customer has made an indemnification or
similar claim against Seller or any Seller Subsidiary and, to the
Knowledge of Seller, no basis for any such claim by any Material
Customer exists. Neither Seller nor any Seller Subsidiary is
currently involved in any material dispute with any Material
Customer and, to the Knowledge of Seller, no basis for any such
dispute exists.

 


3.14           Vendors.
Section 3.14 of the
Disclosure Schedule sets forth a true, correct and complete
list of (a) the material suppliers and vendors for the Business
(each, a “Material
Vendor”, and collectively, the “Material Vendors”),
showing the approximate total spend by Seller or any Seller
Subsidiary from each such supplier or vendor during the applicable
period. No Material Vendor has (x) has canceled or otherwise
terminated, or, to the Knowledge of Seller, threatened to cancel or
terminate, its relationship with Seller or any Seller Subsidiary,
(y) decreased or limited materially or, to the Knowledge of
Seller, threatened to decrease or limit materially, its business
with Seller or any Seller Subsidiary or intends to modify
materially its relationship with Seller or any Seller Subsidiary,
and (z) increased or, to the Knowledge of Seller, threatened
to increase, the prices charged by such Material Vendor to Seller
or any Seller Subsidiary for the goods or services provided by such
Material Vendor. Neither Seller nor any Seller Subsidiary is
currently involved in any material dispute with any Material Vendor
and, to the Knowledge of Seller, no basis for any such dispute
exists.

 


3.15           Accounts
Receivable. All accounts and
notes receivable included in the Transferred Assets are or will be:
(a) valid, existing and genuine; (b) bona fide receivables arising
in the Ordinary Course of Business and collectible in the Ordinary
Course of Business (net of allowances for doubtful accounts
reflected on the Financial Statements); (c) not subject to any
refund or adjustment or any defense, right of set-off, assignment,
restriction, judgment, security interest or other Lien (other than
Permitted Encumbrances), except where indicated; and (d) not
subject to any deduction, free goods discount or other deferred
price or quantity adjustment, except where indicated.

 


3.16           Privacy
and Security.


 


(a)           To
the Knowledge of Seller, Seller’s and Seller
Subsidiaries’ past and present collection, use, analysis,
disclosure, retention, storage, security, and dissemination of
Personal Information and Sensitive Information complies in all
material respects with, and has not in any material respect
violated, (i) any Contract to which Seller or any Seller Subsidiary
is or was a party, (ii) any applicable Laws, including Privacy and
Security Laws, or (iii) any corporate policy applicable to Seller
or any Seller Subsidiary, including those applicable to data
privacy, data security, Personal Information and Sensitive
Information.

 


 




 

-23-








 






 


(b)           None
of the operations, or activities of Seller or any Seller Subsidiary
relating to the Business has resulted, or continues to result, in
Seller or any Seller Subsidiary acting as a covered entity as
defined in 45 C.F.R. § 160.103.

 


(c)           To
the Knowledge of Seller, the Seller’s computer systems are
sufficient in all material respects for the immediate and currently
anticipated future needs of the Business. There have been no
failures, breakdowns or continued substandard performance of any
such computer system that have caused the substantial disruption or
interruption in or to the use of the such computer systems or the
operation of the Business by Seller or any of Seller Subsidiaries.
Seller and the Seller Subsidiaries have taken reasonable
precautions to protect the confidentiality, integrity and security
of such computer systems and all information stored or contained
therein or transmitted thereby from any theft, corruption, loss or
unauthorized use, access, interruption or modification by any
Person. Seller and Seller Subsidiaries have used commercially
reasonable efforts to implement security patches and upgrades that
are generally available for such computer systems.

 


(d)           Neither
Seller nor any Seller Subsidiary is, or has ever been, in each
case: (i) under an investigation by any Governmental Authority for
a violation of any Privacy and Security Laws to the Knowledge of
Seller, (ii) in receipt of any written notices from the United
States Department of Health and Human Services Office for Civil
Rights, Department of Justice, Federal Trade Commission, the
Attorney General of any state or any other Governmental Authority
relating to any such violations, or (iii) to the Knowledge of
Seller, acting in a manner that would trigger a notification or
reporting requirement under any business associate agreement to
which Seller or any Seller Subsidiary is a party or under any
Privacy and Security Laws.

 


(e)           Complete
and accurate copies of any written complaints delivered to Seller
or any Seller Subsidiary alleging a violation of any Privacy and
Security Laws in connection with the Business, have been provided
to Buyer.

 


(f)           To
the Knowledge of Seller, there has been no unauthorized use or
disclosure of Personal Information of any third party by Seller or
any Seller Subsidiary or unauthorized use or disclosure of Personal
Information of Seller or any Seller Subsidiary that would
constitute a breach for which notification to individuals and/or
regulatory authorities is required under any applicable Privacy and
Security Laws.

 


3.17           Product
Warranty. Each product
designed, produced, distributed, marketed or sold by Seller or any
of Seller Subsidiaries is and has been in conformity in all
material respects with all applicable contractual requirements,
including all product specifications and all express
warranties.  Neither Seller nor any of Seller Subsidiaries has
any material Liability for replacement or repair of any such
products or other damages in connection with such products, nor, to
the Knowledge of Seller, is there any reasonable basis for any such
material Liability. Set forth on Section 3.17 of the Disclosure
Schedule are all standard forms of warranty used in the
Business.

 


 




 

-24-








 






 


3.18           Affiliate
Transactions. Except as set
forth on Section 3.18 of
the Disclosure Schedule, other than as contemplated by this
Agreement or as explicitly discussed in the notes to the Financial
Statements, none of the Seller, Seller Subsidiaries, Founder, any
of Seller’s Affiliates or the officers, directors or, to the
Knowledge of Seller, employees of Seller or Seller Subsidiaries has
any direct or indirect interest (other than an equity interest of
less than one percent (1%) of a publicly held company) in any
competitor, supplier or customer of Seller or any of Seller
Subsidiaries, or in any Person from whom or to whom Seller or any
of Seller Subsidiaries has leased any assets, or in any other
Person with Seller or any of Seller Subsidiaries has any business
relationship. Section 3.18
of the Disclosure Schedule sets forth all Contracts between
Seller or any of Seller Subsidiaries, on the one hand, and Founder,
Founder’s Affiliates or Seller’s Affiliates, or any
employees, officers or directors of Seller or Seller Subsidiaries,
on the other hand. Section
3.18 of the Disclosure Schedule sets forth the parties to
and the date, nature and amount of each transaction involving the
transfer of any cash, property or rights to or from Seller or any
of Seller Subsidiaries, on the one hand, and Founder, his
Affiliates, or any such employees, officers or directors of Seller
or Seller Subsidiaries, on the other hand, during the three (3)
years immediately preceding execution of this Agreement (excluding
employment-related compensation and benefits in the Ordinary Course
of Business and any dividends or distributions paid by Seller to
Founder in his capacity as equityholder of Seller).  Except as
set forth on Section 3.18
of the Disclosure Schedule, during the three (3) years
immediately preceding execution of this Agreement, neither Founder
nor any of his Affiliates (excluding Seller and Seller
Subsidiaries) have provided credit enhancements, guaranties, assets
or rights to use assets as collateral or any other assistance to
facilitate or support transactions or the
Business.


 


3.19           Insurance.
Section 3.19 of the
Disclosure Schedule sets forth the following information
with respect to each insurance policy (including property,
casualty, liability and worker’s compensation coverage and
bond and surety arrangements) carried by, or maintained on behalf
of, Seller or any of Seller Subsidiaries, copies of which have been
provided to Buyer: (a) the name, address and telephone number of
the agent; (b) the name of the insurer and policyholder; and (c)
the policy number and period of coverage. With respect to each such
insurance policy, to the Knowledge of Seller: (i) it is legal,
valid, binding, enforceable and in full force and effect, (ii)
Seller and Seller Subsidiaries are not in breach or default in any
material respect (including with respect to giving notices and
timely payment of all premiums payable under all such insurance
policies), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination thereof; and (iii) neither Seller nor Seller
Subsidiaries have received written notice of any pending or
threatened termination or non-renewal with respect thereto.
Section 3.19 of the
Disclosure Schedule sets forth a list of all claims made by
Seller or any of Seller Subsidiaries since December 31, 2013,
against an insurer in respect of coverage under any insurance
policy.

 


 




 

-25-








 






 


3.20           Investment.
To the extent that an Election Notice will be provided, Founder
will be acquiring (directly and indirectly) his equity interest in
Buyer for his own account and not in violation of the federal
securities Laws or any applicable state securities Laws. Founder
qualifies as an “accredited investor”, as such term is
defined in Rule 501(a) promulgated pursuant to the Securities Act
of 1933, as amended (the “Securities Act”). Founder
understands that his ownership of equity interest in Buyer involves
substantial risk. Founder has experience as an investor in
securities and equity interests of companies such as the ones being
transferred pursuant to this Agreement, and Founder can bear the
economic risk of his investment (which may be for an indefinite
period) and has such knowledge and experience in financial or
business matters that Founder is capable of evaluating the merits
and risks of his investment in Buyer. Founder understands that his
equity interests in Buyer have not been registered under the
Securities Act. Founder acknowledges that such securities may not
be transferred, sold, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act
and applicable state securities Laws or pursuant to an applicable
exemption therefrom, and in accordance with the governing documents
of Buyer.

 


3.21           Certain
Business Practices.

 


(a)           To
the Knowledge of Seller, neither Seller nor any of Seller
Subsidiaries, nor any of their respective directors, officers, or
employees, nor any agent or other third party representative acting
on behalf of Seller or any of Seller Subsidiaries, is currently, or
has been: (i) a Sanctioned Person, (ii) organized, resident, or
located in a Sanctioned Country, (iii) directly or indirectly
operating in, conducting business with, or otherwise engaging in
any dealings with any Sanctioned Person or in any Sanctioned
Country, to the extent such activities violate applicable Sanctions
Laws or Ex-Im Laws or (iv) otherwise in violation of any applicable
Sanctions Laws, Ex-Im Laws, AML Laws, Anti-Corruption Laws, or
anti-boycott Laws administered by the U.S. Department of Commerce
or the U.S. Internal Revenue Service.

 


(b)           To
the Knowledge of Seller, neither the Seller nor any of Seller
Subsidiaries, nor any of their respective directors, officers, or
employees, nor any agent or other third party representative acting
on behalf of Seller or any of Seller Subsidiaries, has offered,
paid, promised to pay, or authorized payment of any money, or
offered, given, promised to give, or authorized giving of anything
of value to (i) any Government Official for purposes of influencing
any act or decision of such Government Official in its or his
official capacity, inducing such Government Official to do or omit
to do any act in violation of its or his lawful duty, or securing
any improper advantage, or inducing such Government Official to use
its or his influence with a foreign Governmental Authority to
affect or influence any act or decision of such Governmental
Authority, in each case, in order to assist Seller or any of Seller
Subsidiaries in obtaining or retaining business for or with, or
directing business to any person; (ii) any person, while knowing
that all or a portion of such money or thing of value would or will
be offered, given, or promised, directly or indirectly, to any
Government Official for any prohibited purpose described in clause
(i); or (iii) any other individual or entity in violation of
applicable Anti-Corruption Laws.

 


(c)           Seller
and Seller Subsidiaries have established and maintain in effect
written policies, procedures, and internal controls, and internal
accounting control systems, that are reasonably designed to
prevent, detect and deter violations of applicable Sanctions Laws,
Ex-Im Laws, AML Laws, Anti-Corruption Laws, and anti-boycott
Laws.

 


3.22           No
Omission. No representation
or warranty made by the Seller in this Agreement contains any
untrue statements of a material fact or knowingly omits to state
any material fact necessary, in order to make the representations
and warranties made herein, in light of the circumstances under
which they were made, not misleading.

 


 

 


 




 

-26-








 






 



ARTICLE
4 




REPRESENTATIONS AND WARRANTIES OF BUYER


 


Buyer
hereby represents and warrants to Seller as follows:


 


4.1           Status
of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Buyer is qualified to do
business and is in good standing (to the extent the concept of good
standing is applicable in a particular jurisdiction) in all
jurisdictions in which the character of the properties owned,
leased or operated by it makes such qualification necessary, except
in each case, for any such failures that would not, individually or
in the aggregate, reasonably be expected to have a material adverse
effect on such Buyer’s ability to consummate the transactions
contemplated by this Agreement.


 


4.2           Authorization;
No Conflicts.


 


(a)           Buyer
has the right, power, and authority to enter into this Agreement
and the Other Agreements to which it is a party, to consummate the
transactions contemplated hereby, and otherwise to comply with and
perform its obligations under, this Agreement and the Other
Agreements.


 


(b)           The
execution and delivery by Buyer
of this Agreement do not, the execution and delivery by Buyer
of each Other Agreement to which is,
or will be, a party will
not, and the consummation of
the Acquisition and the other
transactions contemplated to be consummated by them by this
Agreement and such Other
Agreement will not conflict with, or
result in any breach of or constitute a default under (or an event
that, with notice or lapse of time or both, would become a
default), require any consent of any Person pursuant to, or give to others any rights of
termination, acceleration or cancellation under, allow the
imposition of any fees or penalties, require the offering or making
of any payment or redemption, or result in the creation of
any Lien (other than
Permitted Encumbrances) upon any of
the properties or assets of Buyer under, any provision of (i) the organizational
documents of Buyer, (ii)
any Contract to which Buyer is a party or by which any of their properties or
assets is bound, or (iii) any
injunction, judgment, Order or
decree or statute, law, ordinance, legally-binding rule, executive
order, code or regulation applicable to Buyer or its properties or assets, other than, in the
case of clauses (ii) and
(iii) above, any such items that have
not had and would not reasonably be expected to have a material
adverse effect on Buyer. No
consent, permit, authorization or approval of, or registration,
declaration, notice or filing with, any Governmental
Authority is required to be obtained
or made by or with respect to Buyer in connection with the execution, delivery and
performance of this Agreement or any of the Other Agreements or the consummation of the Acquisition
and the other transactions
contemplated hereby and by the Other Agreements, other than (A) compliance with and filings under
applicable Antitrust Laws, (B)
those that may be required solely by reason of
Seller’s (as opposed to any
other third party’s) participation in the Acquisition
and the other transactions
contemplated hereby and by the Other Agreements, and (C) those the failure of which to obtain or
make would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on
Buyer.


 


 




 

-27-








 






 


(c)           Buyer
has duly executed and delivered
this Agreement and on or prior
to the Closing will have
delivered each Other Agreement to which it is, or will be, a party, and this Agreement
constitutes, and each Other
Agreement to which they are, or
will be, a party will
after the Closing constitute, their legal, valid and binding
obligation, enforceable against it in accordance with their
terms, except to the extent that such enforceability may be
limited by the Equitable Exceptions.


 


4.3           Litigation.


 


(a)           There
is no Proceeding pending or, to Buyer’s Knowledge, threatened
in writing against Buyer or involving any of its properties or
assets that would reasonably be expected to: (i) have a material
adverse effect on the ability of Buyer to perform its obligations
under this Agreement or any Other Agreement; or (ii) otherwise
prevent, hinder or delay the consummation of the transactions
contemplated by this Agreement and the Other
Agreements.

 


(b)           Buyer
is not: (i) in default under or in breach of any Order; or (ii) a
party or subject to any Order, except, in each case, where such
default or breach, or such Order, would not reasonably be expected
to: (A) have a material adverse effect on the ability such Buyer to
perform its obligations under this Agreement or any Other
Agreement; or (B) otherwise prevent, hinder or delay the
consummation of the transactions contemplated by this Agreement and
the Other Agreements.

 


4.4           Independent
Investigation. Buyer has such
knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of its participation
in the transactions contemplated by this Agreement and the Other
Agreements. Buyer has conducted its own independent review and
analysis of, and based thereon has formed, an independent judgment
concerning the Transferred Assets, the Assumed Liabilities and the
condition, operations, and prospects of the Business. In entering
into this Agreement, Buyer has relied upon its own review and
analysis and the specific representations and warranties of Seller
expressly set forth in Article 3.


 


4.5           Brokers
and Commissions. No Person has
asserted or is entitled to any commission or broker’s or
finder’s fee in connection with the transactions contemplated
by this Agreement by reason of any act or omission of Buyer, in
each case that would result in any liability to Seller or its
Affiliates.


 


 




 

-28-








 






 



ARTICLE
5 




COVENANTS


 


5.1           Conduct
of Business by Seller. From the date
hereof to the earlier of the date this Agreement is terminated or
the Closing Date, except for transactions that have been set forth
on Section 5.1 of the
Disclosure Schedule, as required by applicable Law, that are
otherwise contemplated by this Agreement, or that are expressly
approved in writing by Buyer (such approval not to be unreasonably
withheld, delayed, or conditioned), Seller shall refrain and shall
cause each Seller Subsidiary from taking the following actions with
respect to the Business, the Transferred Assets or the Assumed
Liabilities:


 


(a)           subjecting
any of the Transferred Assets to any Lien, except for Permitted
Encumbrances;


 


(b)           materially
changing any method of accounting or accounting practice used by it
with respect to the Business and applicable to the preparation of
the Financial Statements, except for any change required by GAAP or
applicable Law;


 


(c)           other
than in the Ordinary Course of Business or in accordance with the
requirements of existing written Benefit Plans or Employment
Agreements, establishing or increasing the benefits under, or
promising to establish, modify or increase the benefits under, any
Benefit Plan or Employment Agreement with respect to Transferred
Employees, or otherwise increasing the compensation payable to any
Transferred Employee, or modifying, renewing, establishing,
adopting or entering into any collective bargaining agreement with
any labor union in regard to any Transferred Employee, except as
may be required by applicable Law;


 


(d)           entering
into any transaction with an Affiliate, except for transactions in
the Ordinary Course of Business and on arm’s-length terms or
not otherwise affecting the Transferred Assets or the Assumed
Liabilities;


 


(e)           incurring
any Liability that would be an Assumed Liability except in the
Ordinary Course of Business;


 


(f)           transferring,
assigning, leasing, selling, licensing, abandoning or otherwise
disposing of any of the Transferred Assets;


 


(g)           undertaking
any action or failing to take any action that does or could,
individually or in the aggregate, reasonably be expected to result
in the loss, lapse, expiration, or abandonment of any Transferred
Intellectual Property;


 


(h)           entering
into any Contract that limits or purports to limit the ability of
Seller or any Seller Subsidiary to engage in the Business or grants
exclusivity with respect to the Business to any Person, or
amending, modifying, renewing, terminating or waiving any material
right under any Transferred Contract;


 


 




 

-29-








 






 


(i)           delaying,
postponing or cancelling the payment of any accounts payable or any
other Liability that would be an Assumed Liability, agreeing or
negotiating with any party to extend the payment date of any such
accounts payable or other Liability, or accelerating the collection
of any accounts or notes receivable that would be included in the
Transferred Assets, or otherwise change any of its practices with
respect to payables, receivables or cash management with respect to
the Business; and


 


(j)           authorizing,
committing or agreeing to take any action that would reasonably be
expected to constitute a breach of any of the foregoing provisions
of this Section 5.1.


 


5.2           Affirmative
Covenants Relating to Seller. From the date
hereof to the earlier of the date this Agreement is terminated or
the Closing Date, Founder and Seller shall use their commercially
reasonable efforts to take and to cause the Seller Subsidiaries to
take the following actions with respect to the Business, the
Transferred Assets and the Assumed Liabilities:

 


(a)           operate
the Business in the Ordinary Course of Business;


 


(b)           maintain
the books, accounts and records of the Business in the Ordinary
Course of Business;


 


(c)           comply
in all material respects with all applicable Laws and Orders
relating to the conduct of the Business as currently
conducted;


 


(d)           provide
Buyer with prompt written notice of events, occurrences or
circumstances which have (either individually or in the aggregate)
a Material Adverse Effect; and


 


(e)           maintain,
preserve and protect the Transferred Assets, retain the Business
Employees and maintain and preserve their relationships with
customers, suppliers, regulatory authorities and others having
business relationships with Seller or any Seller Subsidiary with
respect to the Business.


 


5.3           Consents
and Closing Conditions.


 


(a)           Generally.
Each of Buyer and Seller shall use commercially reasonable efforts
to: (i) obtain all consents, approvals, authorizations and waivers
from third parties required in connection with the transactions
contemplated by this Agreement prior to the Closing; (ii) take such
other actions as may be required to fulfill the closing conditions,
as set forth in Article
8 and Article
9 that are within their control; and (iii) as promptly as
practicable, make any filings required by any applicable Antitrust
Law. Seller shall use commercially reasonable efforts to cause the
representations and warranties of Seller in Article 3 to be true and
correct on and as of the Closing Date. Buyer shall use commercially
reasonable efforts to cause the representations and warranties of
Buyer in Article 4
to be true and correct on and as of the Closing Date. No party
hereto shall take any action that would reasonably be expected to
materially delay the obtaining of or result in not obtaining, any
Permit from any Governmental Authority required to be obtained
prior to Closing.


 


 




 

-30-








 






 


(b)           Third
Party Consents. To the extent that Seller or any Seller
Subsidiary’s rights under any agreement, Contract,
commitment, lease, Permit, or other Transferred Asset to be
assigned to Buyer hereunder may not be assigned without the consent
of another Person which has not been obtained prior to or as of
Closing, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach
thereof or be unlawful, and Seller agrees to use commercially
reasonable efforts to obtain any such required consent(s) as
promptly as possible after Closing. If any such consent shall not
be obtained or if any attempted assignment would be ineffective or
would impair Buyer’s rights under the Transferred Asset in
question so that Buyer would not in effect acquire the benefit of
all such rights, Seller and Buyer shall cooperate in any lawful and
commercially reasonable arrangement, as Buyer may reasonably
request, under which Buyer would, to the maximum extent permitted
by Law and the Transferred Asset, obtain the economic Claims,
rights and benefits under such Transferred Asset and assume the
economic burdens and obligations with respect thereto in accordance
with this Agreement, including by subcontracting, sublicensing or
subleasing such Transferred Asset to Buyer. Seller shall promptly
pay to Buyer when received all monies received by Seller under such
Transferred Asset or any Claim or right or any benefit arising
thereunder and Buyer shall promptly pay Seller for all liabilities
of Seller associated with such Transferred Asset that would
otherwise constitute “Assumed Liabilities” had such
Transferred Asset been assigned to Buyer at the Closing. Nothing in
this Agreement shall be construed as having obligated Seller to
have paid or committed to pay any amount in order to obtain any
consent, waiver, or approval with respect to Contracts with third
parties prior to the Closing.


 


(c)           Audited
Financials. Buyer may, at its sole option and expense,
engage a certified public accountant (the “Auditor”), who shall be
subject to Seller’s reasonable approval, to audit the
Financial Statements (or portion thereof). In the event Buyer
elects to audit the Financial Statements (or portion thereof),
Seller shall reasonably cooperate and shall give the Auditor
reasonable access to Seller’s books and records during
Seller’s normal business hours at the place designated by
Seller; provided,
however, the Auditor may
not remove any original files or records and shall not unreasonably
interfere with the ordinary course of Seller’s business (such
audited balance sheets and statements of the Seller and Seller
Subsidiaries above are referred to collectively as the
“Audited Financial
Statements”). The Audited Financial Statements shall
not differ in any material way from the Financial
Statements.


 


5.4           Access
to Information.


 


(a)           During
the period from the date of this Agreement to the earlier of the
termination of this Agreement in accordance with Article 11 or the Closing Date,
upon reasonable prior notice, Seller shall and shall cause the
Seller Subsidiaries to afford Buyer and its authorized
Representatives reasonable access during normal business hours to
(i) the personnel engaged in the conduct of the Business and (ii)
the books, records or Contracts to the extent relating exclusively
to the Business (other than the Excluded Assets); provided, however, that any such access
or furnishing of information shall be conducted at Buyer’s
expense without reimbursement from Seller or its Affiliates, under
the supervision of Seller’s personnel and in such a manner as
not unreasonably to interfere with the normal operations of Seller
or any Seller Subsidiary. For the avoidance of doubt, any
information furnished or made available by Seller to Buyer pursuant
to this Section
5.4(a) shall be treated as Seller Proprietary Information
(as defined in the letter agreement, dated as of August 30, 2018,
by and between Seller and Buyer (the “Confidentiality
Agreement”)) and shall be treated in accordance with
the Confidentiality Agreement. Notwithstanding anything to the
contrary in this Agreement, Seller and any Seller Subsidiary shall
not be required to disclose any information to Buyer or its
Representatives if such disclosure would, in Seller’s sole
discretion, (A) jeopardize any attorney-client or other legal
privilege, (B) contravene any applicable Laws (including applicable
privacy or data protection Laws), fiduciary duty or binding
agreement entered into prior to the date hereof, or (C) relate
solely to any income Tax Return or related work papers filed or
prepared by or with respect to Seller or solely to any Tax Return
or related work papers prepared by or with respect to any
predecessor entity of Seller.


 


 




 

-31-








 






 


(b)           All
information provided or obtained pursuant to Section 5.4(a) shall be held by
Buyer in accordance with and subject to the terms of the
Confidentiality Agreement, until the Closing Date except such
information as was provided to Seller subject to an obligation of
confidentiality which shall remain confidential per the terms of
each respective agreement.


 


(c)           Any
information provided pursuant to this Section 5.4 shall not
affect or otherwise diminish or obviate in any respect, or affect
Buyer’s right to rely upon, any of the representations,
warranties or covenants contained in this Agreement or the
indemnification rights contained in this Agreement.


 


5.5           Confidentiality.
Seller, on behalf of itself and its Affiliates, acknowledges that
it is in possession of confidential information exclusively
concerning the Business (the “Business Confidential
Information”). Seller agrees that if the transactions
contemplated by this Agreement are consummated, from and after the
Closing, it shall, and it shall cause its Representatives and
Affiliates to keep the Business Confidential Information
confidential and not disclose the Business Confidential Information
without the prior written consent of Buyer; provided, however, that Seller may
disclose such Business Confidential Information to any of its
Representatives or Affiliates who have a commercially reasonable
need to know and who are informed of the confidential nature of
such Business Confidential Information and who are subject to
confidentiality obligations at least as restrictive as those set
forth in this Section
5.5 with respect to any such disclosed Business Confidential
Information. Notwithstanding the foregoing, Business Confidential
Information shall not include any information which (a) has
become publicly known and made generally available through no
wrongful act of Seller, (b) has been rightfully received by a
receiving party from a third party who is authorized to make such
disclosure, or (c) is required to be disclosed by Law (whether
by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) after, to the extent
permissible, providing prompt written notice to Buyer of such
request so that Buyer may seek an appropriate protective Order or
other appropriate remedy.


 


5.6           Exclusivity.
During the period from the date of this Agreement until the earlier
of the termination of this Agreement in accordance with
Article 11 or the
Closing Date (the “Exclusivity Period”),
Seller will not, and will cause its Affiliates (including the
Seller Subsidiaries) not to, directly or indirectly,
(a) solicit, initiate, discuss, or knowingly encourage the
submission of any inquiry, contact, proposal or offer from any
Person relating to the acquisition of the Business or all or any
part of the Transferred Assets, whether by merger, purchase of
stock, purchase of assets, exclusive license, or otherwise (any
such inquiry, contact, proposal or offer, an “Acquisition Proposal”),
(b) negotiate, discuss, or approve any offer or indication of
interest with respect to an Acquisition Proposal or undertake any
transactions similar to the foregoing, (c) furnish any
information with respect to, or assist or participate in, any
effort or attempt by any Person to do or seek to do any of the
foregoing or (d) enter into any agreement, memorandum of
understanding or letter of intent relating to any Acquisition
Proposal. Seller shall promptly (and in any event, within 24 hours)
notify Buyer if it, or any of its Representatives receives after
the date of this Agreement, any Acquisition Proposal or any
indications of interest or requests for information in respect of a
Proposal.


 


 




 

-32-








 






 


5.7           Maintenance
of Books and Records. After the Closing
Date, Seller shall retain the records that are Excluded Assets in
accordance with Seller’s document retention policy, and Buyer
shall retain the books and records of Seller delivered to Buyer
relating to periods prior to the Closing Date in accordance with
Buyer’s document retention policies. During the period during
which such books and records are retained, duly authorized
Representatives of Seller or Buyer, as applicable, may have
reasonable access to such records, during normal business hours and
on reasonable prior written notice, at the requesting party’s
expense, for any reasonable business purpose specified by the
requesting party in such notice. Each of Seller and Buyer shall,
and each shall cause its respective Representatives and Affiliates
to, keep any information obtained pursuant to this Section 5.7 confidential and
not disclose such information without the prior written consent of
the other; provided, however, that a party may
disclose such information to any of its Representatives or
Affiliates who are informed of the confidential nature of such
information and who are subject to confidentiality obligations at
least as restrictive as those set forth in this Section 5.7 with respect to any
such disclosed information. Notwithstanding the foregoing, the
foregoing confidentiality obligations shall not apply with respect
to any information which (a) has become publicly known and made
generally available through no wrongful act of the receiving party,
(b) has been rightfully received by the receiving party from a
third party who is authorized to make such disclosure, or (c) is
required to be disclosed by Law (whether by deposition,
interrogatory, request for documents, subpoena, civil investigative
demand or similar process) after, to the extent permissible,
providing prompt written notice to the other party of such request
so that the other party may seek an appropriate protective Order or
other appropriate remedy.


 


5.8           Update
of Disclosure Schedules. From time to time
prior to the Closing, Seller may supplement or amend the Disclosure
Schedules hereto (each a “Schedule Supplement”);
provided, that no
such supplement or amendment shall limit or otherwise constitute a
waiver by Buyer of any misrepresentation or breach of any warranty
or covenant of Seller hereunder or Buyer’s right to make a
claim for indemnification hereunder.

 


5.9           Restrictive
Covenants.


 


(a)           Non-Solicit;
No Hire. As an inducement for Buyer to enter into this
Agreement and to consummate the Acquisition, each of Seller and
Founder hereby covenants and agrees that during the period
beginning on the date of this Agreement and ending on the fifth (5)
anniversary of the Closing Date (the “Restrictive Period”),
neither Seller nor Founder shall (and Seller shall cause Seller
Subsidiaries and Affiliates not to), directly or indirectly, on
their own behalf or in coordination with or on behalf of others and
in any form or manner whatsoever:

 


(i)           encourage,
solicit, induce, hire or attempt to solicit, induce or hire any
Business Employee to leave the employ of Buyer (or any Affiliate
thereof);

 


(ii)           interfere
with the relationship between Buyer (or any successor thereto or
Affiliate thereof) with any Business Employee or any other Person
who is employed by or otherwise engaged to perform services for
Buyer (or any Affiliate of Buyer) in connection with its operation
of the Business; or

 


(iii)           induce
or attempt to induce any Business Customer, supplier, licensee or
other business relation of the Business not to do business with (or
to cease doing business with) Buyer (or any Affiliate thereof), or
in any way interfere with the relationship between Buyer (or any
Affiliate thereof) and any Business Customer, supplier, licensee or
other business relation thereof (including by inducing or
attempting to induce any such Person to terminate, reduce or not
expand the amount of, or adversely modify the nature, volume or
scope of, the business such Person does with Buyer (or any
Affiliate thereof)).

 


(b)           Non-Compete.
As an inducement for Buyer to enter into this Agreement and to
consummate the Acquisition, each of Seller and Founder hereby
covenants and agrees that for the duration of the Restrictive
Period (except as provided below), neither Seller nor Founder shall
(and Seller shall cause Seller Subsidiaries and Affiliates not to),
directly or indirectly, on its own behalf or in coordination with
or on behalf of others and in any form or manner whatsoever engage
or have a financial interest in, manage, control, participate in
(whether as an officer, director, employee, partner, manager,
member, agent, representative or otherwise), consult with or render
services to, anywhere in the world, the Restricted Business.
Nothing herein shall prohibit Seller or Founder (or any of Seller
Subsidiaries or Affiliates) from being a passive owner of not more
than two percent (2%) of the outstanding stock of any class of a
corporation which is publicly traded, so long as such Person has no
active participation in the business of such
corporation.

 


 




 

-33-








 






 


(c)           Seller
and Founder Acknowledgements. Each of Seller and Founder
acknowledges that (i) Seller and Founder have expended and
following the Closing, Buyer shall continue to expend substantial
amounts of time, money and effort to develop business strategies,
employee and customer relationships and goodwill of the Business,
(ii) restrictions contained in this Section 5.9 are reasonable and
necessary to protect the legitimate interests of Buyer, (iii) Buyer
would not enter into this Agreement but for the restrictions
contained in this Section
5.9, (iv) the restrictions contained in this Section 5.9 are reasonable with
respect to duration, geographic area and scope, (v) any breach by
Founder, Seller, any Seller Subsidiary or any Affiliate of any of
the restrictions contained in this Section 5.9 may result in
irreparable harm and damages that could not be adequately
compensated by a monetary award and further that such potential
harm outweighs the potential harm to Founder, Seller, Seller
Subsidiary or any Affiliate thereof of the enforcement of the
restrictions contained in this Section 5.9, and accordingly,
Buyer will be entitled to seek injunctive or other equitable relief
to prevent or redress any such breach (without posting a bond or
other security); (vi) Buyer is entering into this Agreement in
reliance upon Seller’s and Founder’s agreement to the
restrictions contained in this Section 5.9; and (vii)
Seller and Founder will receive (whether directly or indirectly)
the Purchase Price and other substantial benefits from the
Acquisition, and (viii) Buyer will acquire the Transferred Assets
and substantial goodwill associated therewith, and that this
Agreement is intended to comply with the laws of the State of
Delaware and the State of Florida and all other jurisdictions that
might be deemed to be applicable hereto and which restrict or
otherwise limit the enforceability of a contract that restrains a
Person from engaging in a lawful profession, trade or business. In
the event that any covenant contained in this Section 5.9 should ever be
adjudicated to exceed the time, geographic, product or service, or
other limitations permitted by applicable Law in any jurisdiction,
then any court is expressly empowered to reform such covenant, and
such covenant shall be deemed reformed, in such jurisdiction to the
maximum time, geographic, product or service, or other limitations
permitted by applicable Law. The covenants contained in this
Section 5.9
and each provision hereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant
or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such covenant or provision in
any other jurisdiction.

 


(d)           Disparagement.
Following the Closing, neither Seller nor Founder shall, and Seller
shall cause Seller Subsidiaries and Affiliates not to, in any
manner take or cause to be taken any action which is designed or
intended to discourage, or could, individually or in the aggregate,
reasonably be anticipated to have the effect of discouraging
brokers, distributors, customers, suppliers, referral sources,
Governmental Authorities, insurance companies, lessors,
consultants, salespersons, advisors and other business associates
from maintaining the same business relationships with Buyer (or any
successor thereto) after the date of this Agreement as were
maintained with Founder, Seller or any Seller Subsidiaries prior to
the date of this Agreement. Following the Closing, Founder and
Seller shall, and Seller shall cause the Seller Subsidiaries to,
refer all customer inquiries with respect to the Business to
Buyer.

 


(e)           Tolling
of Restrictive Period. In the event of any nonfulfillment or
breach by Founder, Seller, Seller Subsidiaries or any Affiliate of
Seller of any of the covenants and agreements set forth in this
Section 5.9,
as determined by a court of competent jurisdiction, the Restrictive
Periods with respect to Founder or Seller shall be tolled during
(and shall be deemed to be automatically extended by) any period in
which Seller or Founder is in violation of the covenants and
agreements set forth in this Section 5.9.

 


5.10           Further
Assurances. In case at any
time after the Closing any further action is necessary or desirable
to carry out the purposes of this Agreement, each of the parties
will take such further action (including the execution and delivery
of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to
indemnification therefor under Article 12).

 







ARTICLE
6 




TAX MATTERS


 


6.1           Proration
of Taxes.


 


(a)           Seller
shall timely and properly prepare and file (or cause to be timely
prepared and filed) all Tax Returns required by applicable Law for
any period ending on or before the Closing Date that are required
to be filed, regardless of when due.


 


 




 

-34-








 






 


(b)           Liability
for all real property Taxes, personal property Taxes and similar ad
valorem obligations levied with respect to the Business, any Seller
Subsidiary, the Transferred Assets and the Assumed Liabilities
(individually or in the aggregate) for a taxable period which
includes (but does not end on) the Closing Date (a
“Straddle
Period”) shall be apportioned between Seller and Buyer
(the “Apportioned
Obligations”) based on the number of days of such
taxable period included in the period ending on and including the
Closing Date (the “Pre-Closing Tax Period”)
and the number of days of such taxable period included in the
period after the Pre-Closing Tax Period (the “Post-Closing Tax
Period”). Seller shall be liable for the proportionate
amount of such Apportioned Obligations that is attributable to the
Pre-Closing Tax Period based on the number of days in the
Pre-Closing Tax Period to the total number of days in the Straddle
Period. Buyer shall be liable for the proportionate amount of such
Apportioned Obligations that is attributable to the Post-Closing
Tax Period based on the number of days in the Post-Closing Tax
Period to the total number of days in the Straddle Period. Within a
reasonable period after the Closing Date, Seller and Buyer shall
present a reimbursement to which Seller and Buyer are entitled
under this Section
6.1(b) together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other
party within 10 days after delivery of such statement. Thereafter,
Seller and Buyer shall promptly notify each other upon receipt of
any bill for real or personal property Taxes relating to the
Business, the Transferred Assets or the Assumed Liabilities, part
or all of which are attributable to the Post-Closing Tax Period,
and shall promptly deliver such bill to the other, and the parties
shall true up the amounts owed in accordance with this Section 6.1(b). In the event
that either Seller or Buyer make a payment for which they are
entitled to reimbursement under this Section 6.1(b), the other party
shall make such reimbursement promptly but in no event later than
10 days after the delivery of a statement setting forth the amount
of reimbursement to which the presenting party is entitled along
with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement. Any payment required under
this Section 6.1(b)
and not made within 30 days of delivery of the statement shall bear
interest at the rate per annum determined, from time to time, under
the provisions of Code Section 6621(a)(2) for each day until
paid.


 


6.2           Cooperation
on Tax Matters.

 


(a)           Buyer
and Seller agree to furnish, or cause to be furnished to the other
upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to
Seller, the Transferred Assets, the Business, and the Assumed
Liabilities as is reasonably necessary for the filing of any Tax
Return, the preparation for any Tax audit, or the prosecution or
defense of any Claim or Proceeding relating to any proposed Tax
adjustment relating to the Transferred Assets, the Business or the
Assumed Liabilities; provided, however, that Seller shall not
be obligated to furnish or cause to be furnished to Buyer its
income Tax Returns. Buyer and Seller shall keep all such
information and documents received by them confidential unless
otherwise required by Law. Buyer and Seller shall cooperate with
each other as reasonably necessary to effect the foregoing. Buyer
and Seller agree, upon request, to use their reasonable best
efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed with
respect to the transactions contemplated under this Agreement.
Nothing in this Section
6.2(a) shall require a party to disclose information not
related specifically to the Transferred Assets, Assumed Liabilities
or Business to the extent it reasonably deems such information to
be confidential.


 


(b)           Buyer
and Seller agree to retain, or cause to be retained, all books and
records pertinent to the Transferred Assets until the applicable
period for assessment of Taxes under applicable Law (giving effect
to any and all extensions or waivers) has expired and such
additional period as necessary for any administrative or judicial
Proceedings relating to any proposed assessment, and to abide with
all record retention agreements entered into with any Tax
authority.


 

 


 




 

-35-








 






 


6.3           Tax
Proceedings.


 


(a)           Buyer
shall promptly notify Seller in writing upon receipt by Buyer or
any of its Affiliates of any written communication from a
Governmental Authority concerning Taxes for which Buyer may be
entitled to recovery under this Agreement or that relates to
Seller’s or any of Seller’s Affiliate’s Taxes for
any taxable year or other period and shall promptly notify Seller
in writing of any pending or threatened audit, Claim, demand or
administrative or judicial Proceeding (a “Tax Claim”) that could
give rise to a right of indemnification under this Agreement or
that relates to Seller’s or any of Seller’s
Affiliate’s Taxes for any taxable year or other period
describing in reasonable detail the facts and circumstances with
respect to the subject matter of such Tax Claim; provided, however, that any delay in such
notice shall not affect Buyer’s right to recovery or
indemnification hereunder except to the extent of actual material
prejudice to Seller.


 

 


(b)           Seller
shall have the exclusive right to control any Tax Claim to the
extent that any such Tax Return or Tax Claim (i) relates to
Seller’s or any of Seller’s Affiliate’s Taxes for
any taxable year or period, or (ii) could reasonably be expected to
result in any Losses for Taxes with respect to which Seller has
agreed to provide indemnification under this Agreement. Upon
Seller’s request, Buyer shall execute any powers of attorney
or similar documents that may be required to effectuate the intent
of this Section
6.3(b).

 







ARTICLE
7 




EMPLOYEE MATTERS


 


7.1           Employment
of Transferred Employees. As of the Closing
Date, Buyer shall, or shall cause its Affiliates to, make offers of
employment to each Business Employee set forth on Section 7.1 of the Disclosure
Schedule (the “Disclosure Employees”).
All Disclosure Employees to whom Buyer (or an Affiliate of Buyer)
offers employment and who accept such offers of employment and
become employed by Buyer (or an Affiliate of Buyer), are herein
referred to herein as the “Transferred Employees”
and each Transferred Employee shall cease to be an employee of
Seller or any of the Seller Subsidiaries, as applicable, as of the
Closing Date (or, with respect to any Transferred Employee who is
not actively at work on the Closing Date, upon such
individual’s return to active employment with Buyer or its
Affiliates).


 


7.2           Third
Party Rights; Amendments to Employee
Plans.
Nothing in this Agreement, express or implied, shall affect the
right of Seller (or, following the Closing, Buyer) to terminate the
employment of any employee, including any Business Employee. This
Agreement shall not limit the ability or right of Seller or its
Affiliates (or Buyer or its Affiliates after the Closing) to amend
or terminate any Benefit Plan (or employee benefit plan of Buyer,
as applicable) or other benefit or compensation plan or program
after the Closing and nothing contained herein shall be construed
as an amendment to or modification of any such plan. Nothing
contained in this Agreement, express or implied, shall constitute
an amendment to any Benefit Plan.


 


 




 

-36-








 











ARTICLE
8 




BUYER’S CONDITIONS TO CLOSING


 


The
obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, at or prior to
the Closing, of each of the following conditions, any or all of
which may be waived in writing, in whole or in part, by Buyer in
its sole discretion:


 


8.1           Representations
and Warranties. The
representations and warranties of Seller set forth in this
Agreement shall be true and correct in all respects at and as of
the Closing (or, in the case of those representations and
warranties that are made as of a particular date or period, as of
such date or period).


 


8.2           Performance
of Covenants. Seller shall have
performed in all material respects all covenants and obligations
and complied with all conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing
Date.


 


8.3           No
Litigation. There shall not
be any litigation or Proceeding brought by any Governmental
Authority that is pending and seeking to restrain or invalidate the
transactions contemplated by this Agreement.


 


8.4           No
Orders. No Orders
enjoining or preventing the consummation of any material portion of
the transactions contemplated by this Agreement shall be in
effect.


 


8.5           Material
Adverse Effect. Since the date of
this Agreement, no Material Adverse Effect shall have occurred and
be continuing.


 


8.6           Consents.
The parties shall have received all of the consents, approvals,
authorizations, clearances, waivers or licenses of any Governmental
Authority or third parties necessary for the consummation of the
Acquisition, including as provided in Section 3.2(b) of the Disclosure
Schedule.

 


8.7           Closing
Documents. Seller shall have
delivered all documents required to be delivered by it at Closing
pursuant to Section 10.1 of this
Agreement, in each case in form and substance reasonably
satisfactory to Buyer.


 


8.8           Financing.
Buyer shall have received cash proceeds from an equity or debt
financing, on terms and conditions satisfactory to Buyer, in an
aggregate amount that the Buyer in good faith deems sufficient for
(i) the payment of the Purchase Price, (ii) the payment of all fees
and expenses related to such financing and/or this Agreement, and
(iii) the maintenance of sufficient working capital for the
operation of the Business after the Closing.


 


8.9           Audit
Financials. Buyer shall have
received the Audited Financial Statements in a form reasonably
satisfactory to Buyer.


 




 

-37-








 






 



ARTICLE
9 




SELLER’S CONDITIONS TO CLOSING


 


The
respective obligations of Seller to, or to cause the Seller
Subsidiaries, to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the
Closing, of the following conditions, any or all of which may be
waived in writing, in whole or in part, by Seller in its sole
discretion:


 


9.1           Representations
and Warranties. The
representations and warranties of Buyer herein contained in
Article 4 shall be
true and correct in all respects at and as of the Closing (or, in
the case of those representations and warranties that are made as
of a particular date or period, as of such date or
period).


 


9.2           Performance
of Covenants. Buyer shall have
performed in all material respects all covenants and obligations
and complied with all conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing
Date.


 


9.3           No
Litigation. There shall not
be any litigation or Proceeding brought by any Governmental
Authority that is pending or threatened and seeking to restrain or
invalidate the transactions contemplated by this
Agreement.


 


9.4           No
Orders. No Orders
enjoining or preventing the consummation of any material portion of
the transactions contemplated by this Agreement shall be in
effect.


 


9.5           Closing
Documents. Buyer shall have
delivered all documents required to be delivered by them at Closing
pursuant to Section 10.2 of this
Agreement, in each case in form and substance reasonably
satisfactory to Seller.


 



ARTICLE
10 




ITEMS TO BE DELIVERED AT CLOSING


 


10.1           Items
to be Delivered by Seller. At the Closing,
Seller shall deliver or cause to be delivered by the applicable
Seller Subsidiary or other appropriate third Person to
Buyer:


 


(a)           a
certificate of Seller, dated as of the Closing Date and executed by
an authorized Representative of Seller, to the effect that each of
the conditions specified in Section 8.1 and
Section 8.2
are satisfied (the “Seller Compliance
Certificate”);


 


(b)           one
or more bills of sale, assignments and other instruments of
transfer relating to the Transferred Assets, which shall be
attached hereto as Exhibit
A at the Closing (“Bills of Sale”), duly
executed;


 


(c)           a
duly executed assignment and assumption agreement, which shall be
attached hereto as Exhibit
B at the Closing (the “Assignment and Assumption
Agreement”);


 


 




 

-38-








 






 


(d)           duly
executed assignment documents for each of the Transferred
Intellectual Property, which shall be attached hereto as
Exhibit C at the
Closing (the “IP
Assignments”); and


 


(e)           a
certificate complying with the provisions of Section 1445 of the
Code to the effect that Seller is not a “foreign
person” within the meaning of Section 1445 of the
Code;


 


and
simultaneously with such delivery, Seller shall take such steps as
are reasonably required to put Buyer in actual possession and
operating control of the Transferred Assets; it being understood
that, in each case, such deeds, bills of sale, assignments and
other instruments of transfer shall not require Seller or any of
its Affiliates, including any Seller Subsidiary, to make any
additional representations, warranties or covenants, expressed or
implied, not contained in this Agreement.


 


10.2           Items
to be Delivered by Buyer. At the Closing,
Buyer shall deliver or cause to be delivered to Seller and the
Seller Subsidiaries:


 


(a)           a
certificate of Buyer, dated as of the Closing Date and executed by
an authorized Representative of Buyer, to the effect that each of
the conditions specified in Section 9.1 and
Section 9.2
are satisfied (“Buyer Compliance
Certificate”);


 


(b)           duly
executed Bills of Sale;


 


(c)           the
duly executed Assignment and Assumption Agreement;


 


(d)           duly
executed IP Assignments; and


 


(e)           the
Estimated Purchase Price in immediately available funds pursuant to
the wire transfer instructions provided by Seller, and to the
extent that Seller has provided Buyer with the Election Notice, a
stock certificate in Seller’s name representing such amount
of shares of Common Stock of Novume Solutions, Inc. as set forth in
the Election Notice.


 





ARTICLE
11 




TERMINATION


 


11.1           Termination
by Mutual Consent. This Agreement
may be terminated and the transactions contemplated herein may be
abandoned at any time prior to the Closing, by the mutual written
consent of Seller and Buyer.


 


11.2           Termination
by either Buyer or Seller. This Agreement
may be terminated and the transactions contemplated herein may be
abandoned at any time prior to the Closing by Buyer or Seller if
(a) the Closing shall not have occurred prior to April 10, 2019
(“Outside Closing
Date”), provided, however, that the right to
terminate this Agreement under this Section 11.2 shall not be
available to any party whose failure (or failure by any of its
Affiliates) to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of
the Closing to occur prior to the Outside Closing Date; or (b) any
court of competent jurisdiction or other Governmental Authority
having jurisdiction over Seller, Seller Subsidiaries, Buyer, or the
Business has issued an Order or taken any other final action
restraining, enjoining, or otherwise prohibiting or materially
restricting the consummation of the transactions contemplated in
this Agreement, and such Order or other action shall have become
final and nonappealable.


 




 

-39-








 






 


 


11.3           Termination
by Buyer. This Agreement
may be terminated and the transactions contemplated herein may be
abandoned at any time prior to the Closing by Buyer if (a) 
Seller breached any of its representations or warranties or shall
have failed to perform in any material respect any of its covenants
or agreements contained in this Agreement in such a manner that the
closing conditions set forth in Section 8.1 or Section 8.2, as applicable,
shall not be satisfied, which breach or failure is not curable or,
if curable, is not cured within 30 days after the receipt of
written notice by Buyer to Seller of such breach or failure; or
(b) any condition in Article 8 becomes incapable of
fulfillment at the Closing.


 


11.4           Termination
by Seller. This Agreement
may be terminated and the transactions contemplated herein may be
abandoned at any time prior to the Closing by Seller if (a) 
Buyer has breached any of its representations or warranties or
failed to perform in any material respect any of its covenants or
agreements contained in this Agreement in such a manner that the
closing conditions set forth in Section 9.1 or Section 9.2, as applicable,
shall not be satisfied, which breach or failure is not curable or,
if curable, is not cured within 30 days after the receipt of
written notice by Seller to Buyer of such breach or failure; or
(b) any condition in Article 9 becomes incapable of
fulfillment at the Closing.


 


11.5           Notice
of Termination. The party seeking
to terminate this Agreement pursuant to this Article 11 (other than
Section 11.1) shall
give prompt written notice of such termination to the other
party.


 


11.6           Effect
of Termination and Abandonment. In the event of
the termination of this Agreement pursuant to any of the provisions
of this Article 11,
none of Seller, Founder or Buyer shall have any liability or
further obligation to the other party to this Agreement;
provided,
however, that the
provisions of Section
13.7 relating to press releases and public announcements,
Section 13.15
relating to expenses, the second sentence of Section 5.4(a) relating to
access to information, and this Section 11.6 shall survive any
termination of this Agreement pursuant to the terms of this
Article 11;
provided,
further, that
nothing herein will relieve any party from liability for a breach
of any material representation or warranty or any failure to
perform any covenant and agreement occurring prior to the
termination; provided,
however, that Seller shall
be relieved from liability for a breach of any material
representation or warranty or failure to perform any covenant
occurring prior to the termination, to the extent that such
termination arises from a failure to fulfil the condition set forth
in Section 8.8 and
no action or omission of Seller or Founder was the proximate cause
of such failure to fulfil the condition in Section 8.8. Upon any
termination of this Agreement, each party hereto will return or
destroy all documents, work papers and all other material of the
other party relating to the transactions contemplated hereby and
all copies of such materials, whether so obtained before or after
the execution hereof, to the party furnishing the
same.


 




 

-40-








 






 



ARTICLE
12 




SURVIVAL; INDEMNIFICATION


 


12.1           Survival
of Representations and Warranties. The
representations and warranties of the parties (whether set forth in
this Agreement or any Other Agreements, or the Disclosure Schedule,
agreement, certificate or other document delivered in connection
herewith) shall survive the Closing until the twenty four (24)
month anniversary of the Closing Date, except that the Fundamental
Representations shall survive indefinitely with respect to the
matters covered by such representations. Notwithstanding the
foregoing, all representations and warranties related to any claim
for indemnification asserted under this Article 12 within the relevant
time period set forth in this Section 12.1 shall survive
until all such claims shall have been finally resolved and payment
in respect thereof, if any is required to be made, shall have been
made. All covenants and agreements of the parties (whether set
forth in this Agreement or any Other Agreements, the Disclosure
Schedule, or any other certificate or other document delivered in
connection herewith and whether to be performed prior to the
Closing or after the Closing) shall survive the Closing
indefinitely or until the latest date permitted by Law. The
respective representations and warranties of the parties (whether
set forth in this Agreement or any Other Agreements, the Disclosure
Schedule or any agreement, certificate or other document delivered
in connection herewith), and the rights to indemnification set
forth in this Agreement, shall in no event be deemed waived or
otherwise affected by any investigation, inquiry or examination
made, or any knowledge acquired, by any party or by the acceptance
by any party of any certificate hereunder.

 


12.2           General
Indemnification.

 


(a)           Indemnification
Obligations of Seller and Founder. Subject to the provisions
contained in this Article
12, from and after the Closing, Seller and Founder, jointly
and severally, shall indemnify and hold harmless Buyer, its
Affiliates and their respective officers, directors, employees,
agents, representatives, successors and permitted assigns
(collectively, the “Buyer Indemnified
Parties”) in respect of any Losses that any of the
Buyer Indemnified Parties may incur, sustain or suffer directly or
indirectly, as a result of, with respect to, in connection with or
relating to any of the following:

 


(i)           any
breach or inaccuracy as of the date hereof or as of the Closing
Date of any representation or warranty of Seller contained in this
Agreement or any Other Agreements, the Disclosure Schedule, or any
other schedule, agreement, certificate or other document delivered
by or on behalf of Seller in connection herewith;

 


(ii)           any
nonfulfillment or breach by Seller or any Seller Subsidiary of any
covenant, agreement or obligation applicable to it under this
Agreement or any Other Agreement, the Disclosure Schedule, or any
other schedule, agreement, certificate or other document delivered
by or on behalf of Seller in connection herewith;

 


(iii)           any
Retained Liabilities;

 


(iv)           all
Taxes for which Seller is responsible pursuant to Section 6.1 or Section 13.14;
or

 


 




 

-41-








 






 


 

 


(v)           any
claim relating to warranty obligations or services with respect to
any product or service provided by Seller or any Seller
Subsidiaries prior to the Closing in connection with the operation
of the Business other than claims relating to warranty obligations
incurred in the Ordinary Course of Business.

 


(b)           Indemnification
Obligations of Buyer. Subject to the provisions contained in
this Article 12,
after the Closing, Buyer shall indemnify and hold harmless Seller,
its Affiliates and their respective officers, directors, employees,
agents, representatives, successors and permitted assigns
(collectively, the “Seller Indemnified
Parties”) in respect of any Losses that any Seller
Indemnified Party may incur, sustain or suffer as a result of, with
respect to, in connection with or relating to any of the
following:

 


(i)           any
breach or inaccuracy as of the date hereof or as of the Closing
Date of any representation or warranty of Buyer contained in this
Agreement or any Other Agreement, or any other schedule, agreement,
certificate or other document delivered by or on behalf of Buyer in
connection herewith;

 


(ii)           any
nonfulfillment or breach by Buyer of any covenant, agreement or
other obligation applicable to Buyer under this Agreement or any
Other Agreement, or any schedule, agreement, certificate or other
document delivered by or on behalf of Buyer in connection herewith;
or

 


(iii)           any
Assumed Liabilities.

 


(c)           Notwithstanding
any other provision in this Agreement to the contrary, if any
representation or warranty contained in this Agreement or any Other
Agreement, the Disclosure Schedule or in any Schedule, agreement,
certificate or other document delivered in connection herewith is
qualified by materiality, “Material Adverse Effect” or
a derivative thereof, such qualification will be ignored and deemed
not included in such representation or warranty for purposes of (i)
determining whether there has been a breach or inaccuracy of such
representation or warranty or certificate and (ii) calculating the
amount of Losses with respect to any such breach or
inaccuracy.

 


12.3           Limitations
on Indemnification by Seller and Founder.
Notwithstanding
anything contained in Section 12.2, neither
Seller nor Founder shall be required to indemnify the Buyer
Indemnified Parties in respect of any Losses for which indemnity is
claimed under Section 12.2(a)(i)
(excluding any Losses relating to (i) any breach or inaccuracy of
any Fundamental Representation or (ii) any Retained Liability) to
the extent that the aggregate amount of such Losses exceed Five
Million Dollars ($5,000,000) (“Liability Limit”;
provided, that the
Liability Limit shall not apply or limit indemnification with
respect to any Losses relating to any facts or circumstances which
constitute or arise out of fraud, intentional misrepresentation or
willful misconduct.

 


12.4           Limitations
on Indemnification by Buyer. Notwithstanding
anything contained in Section 12.2, Buyer shall
not be required to indemnify the Seller Indemnified Parties
against, or reimburse any Seller Indemnified Parties in respect of
any Losses for which indemnity is claimed under Section 12.2(b)(i)
(including, for the avoidance of doubt, any Losses relating to any
breach or inaccuracy of any Fundamental Representation) to the
extent that the aggregate amount of such Losses exceeds the
Purchase Price Cap; provided, that the Purchase
Price Cap shall not apply or limit indemnification with respect to
any Losses relating to any facts or circumstances which constitute
or arise out of fraud, intentional misrepresentation or willful
misconduct.

 


 




 

-42-








 






 


12.5           Manner
of Payment.

 


(a)           Any
indemnification owing pursuant to this Article 12 by Seller or Founder
shall be paid within ten (10) Business Days after the determination
of the amount of such Losses thereof.

 


(b)           Notwithstanding
anything contained herein to the contrary, the amount of any
indemnification payable under this Article 12 will be net of any
insurance proceeds actually received by the Indemnified Party under
any policies of insurance covering the Loss giving rise to the
indemnification claim, less any costs and expenses
incurred by the Indemnified Party in connection with the recovery
of such insurance proceeds, and less any related increases in
insurance premiums or other chargebacks incurred by the Indemnified
Party.

 


12.6           Third
Party Claims. If any Proceeding
is initiated by any third party (any such Proceeding, a
“Third Party
Claim”) against any Person entitled to seek
indemnification under this Article 12 (an
“Indemnified
Party”), and if such Indemnified Party intends to seek
indemnification with respect thereto under this Article 12, such Indemnified
Party shall promptly, after receipt of written notice of such
Proceeding, provide written notice of such Proceeding to the party
or parties from whom the Indemnified Party intends to seek
indemnification (the “Responsible Party”),
which notice shall describe such Proceeding in reasonable detail
and the amount claimed in respect thereof (if known and
quantifiable); provided, that the failure to
so notify the Responsible Party shall not relieve the Responsible
Party of its obligations hereunder unless and to the extent the
Responsible Party shall be actually and materially prejudiced by
such failure to so notify. The Responsible Party shall be entitled
to participate in the defense of such Proceeding giving rise to an
Indemnified Party’s claim for indemnification at the
Responsible Party’s expense, and at its option (subject to
the limitations set forth below) shall be entitled to assume
control of the defense thereof by appointing a reputable counsel
reasonably acceptable to the Indemnified Party to be the lead
counsel in connection with such defense within thirty (30) days of
its receipt of notice of the Proceeding; provided, that prior to the
Responsible Party assuming control of such defense, it shall
(x) demonstrate to the Indemnified Party in writing the
Responsible Party’s financial ability to provide full
indemnification to the Indemnified Party with respect to such
Proceeding (including the ability to post any bond required by the
court or adjudicative body before which such Proceeding is taking
place) and (y) subject to the limitations set forth
herein, agree in writing to be fully responsible for all
Losses relating to such Proceeding; provided, further, that:

 


(a)           
the Indemnified Party shall be entitled to participate (at its sole
cost) in the defense of such claim and to employ counsel of its
choice for such purpose;

 


 




 

-43-








 






 


(b)           
the Responsible Party shall not be entitled to assume control of
such defense if (i) the claim for indemnification relates to
or arises in connection with any criminal proceeding, action,
indictment, allegation or investigation, (ii) the Indemnified
Party reasonably believes an adverse determination with respect to
the Proceeding giving rise to such claim for indemnification would
be materially detrimental to or materially injure the Indemnified
Party’s reputation or future business prospects,
(iii) such claim seeks an injunction or equitable relief
against the Indemnified Party, (iv) the Third Party Claim may
result in suspension or debarment of Buyer or any Affiliate of
Buyer by a Governmental Authority, (v) a conflict of interest
exists between the Responsible Party and the Indemnified Party with
regard to the Third Party Claim, (vi) the Responsible Party
failed or is failing to vigorously prosecute or defend such claim,
or (vii) the defense of such Proceeding by the Responsible Party
would reasonably be expected to materially adversely affect the
Indemnified Party’s relationship with Buyer’s (or its
successor’s) relationships with material customers or
vendors; and

 


(c)           
if the Responsible Party shall control the defense of any such
claim, the Responsible Party shall obtain the prior written consent
of the Indemnified Party before entering into any settlement of a
Proceeding unless the settlement involves only payment of money
damages, all such money damages will be the responsibility of, and
paid by, the Responsible Party, the settlement does not impose any
injunctive or other equitable relief and the settlement
unconditionally releases the Indemnified Party from all Liabilities
with respect to such claim.

 


12.7           Direct
Claims. Any claim by an
Indemnified Party with respect to a claim for indemnity under this
Article 12 that
does not result from a claim by a Third Party will be asserted by
giving the Responsible Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and
the basis for indemnification (taking into account the information
then available to the Indemnified Party), and asserting the amount,
if known, or if not known, an estimate of the foreseeable maximum
amount of claimed Losses resulting from such claim (which estimate
shall not be conclusive of the final amount of such Losses) (an
“Indemnity
Notice”). The failure of the Indemnified Party to
provide an Indemnity Notice to the Responsible Party shall not
relieve the Responsible Party of its obligations hereunder unless
and only to the extent such failure shall have an actual
prejudicial effect on the defenses or other claims available to the
Responsible Party. If the Responsible Party notifies the
Indemnified Party within 20 days from its receipt of the Indemnity
Notice that the Responsible Party disputes such claim (the
“Dispute
Notice”), the claim shall be resolved as provided
pursuant to Sections 13.10,
13.11 and
13.12. If the
Responsible Party does not timely deliver a Dispute Notice, or
delivers a Dispute Notice that does not object to all of the Losses
set forth in the Indemnity Notice, the Responsible Party shall be
deemed to have accepted and agreed with all or such portion of the
claim and shall be conclusively deemed to have consented to the
recovery by the Indemnified Party of all or such portion of the
Losses specified in the Indemnity Notice.

 


12.8           Final
Purchase Price Adjustment. All indemnification
payments made under this Article 12 shall be deemed to
be an adjustment to the Final Purchase Price.

 


12.9           Exclusive
Remedies. The remedies
provided in this Article
12 and any limitations set forth herein, shall, from and
after the Closing, be the sole and exclusive monetary remedies of
the Buyer Indemnified Parties and the Seller Indemnified Parties
with respect to the Acquisition or relating to or arising out of
the Other Agreements (except (a) in the case of fraud, intentional
misrepresentation, or willful misconduct, and (b) for any other
remedies expressly set forth in this Agreement), and subject to the
foregoing, no party hereto shall have any other rights or remedies
in connection with any breach of this Agreement or any other Loss
arising out of the negotiation, entry into or consummation of the
Acquisition for the recovery of Losses resulting from, relating to
or arising out of this Agreement.

 


 




 

-44-








 






 


12.10                      Limitation
of Consequential Damages. In no event shall
any Responsible Party be responsible or liable for any Loss or
other amounts under this Article 12 that are
consequential damages that are not reasonably foreseeable or are
special, punitive or exemplary damages, except, in all cases, to
the extent any such Losses or other amounts result or arise from or
are related to fraud, intentional misrepresentation, willful
misconduct, or a willful breach of a covenant or agreement set
forth in this Agreement or are required to be paid to a Third Party
in respect of a Third-Party Claim.


 



ARTICLE
13 




MISCELLANEOUS


 


13.1           Notices.
Any notices or other communications required or permitted hereunder
(including, by way of illustration and not limitation, any notice
permitted or required under Article 13 hereof) to any party
hereto shall be sufficiently given when delivered in person, or
when sent by certified or registered mail, postage prepaid, or one
Business Day after dispatch of such notice with an overnight
delivery service, or when transmitted by facsimile or other form of
electronic communication if an answer back is received by the
sender, in each case addressed as follows:


 


In the
case of Buyer:


 


Novume
Solutions, Inc.


14420
Albemarle Point Place, Suite 200


Chantilly, VA
20151


Attention :
Robert Berman


 


With a
copy to (which copy will not constitute notice):


 


Crowell
& Moring LLC


590
Madison Avenue


New
York, NY 10022


Attn.:
Paul J. Pollock, Esq. and Jonathan S. Nesher, Esq.


 


In the
case of Seller:


 


OpenALPR
Technologies, Inc.


324
Annison Drive


Commerce Township,
MI 48382


 


or such
substituted address or attention as any party shall have given
notice to the others in writing in the manner set forth in this
Section 13.1.
For a notice to be valid, an email copy shall accompany each of the
foregoing modes of noticing a party. An email notice, by itself,
shall suffice as notice at such time as the sender receives a
receipt acknowledgment or the recipient replies, directly or
indirectly, to such notice.

 


 




 

-45-








 






 


13.2           Amendment.
This Agreement may be amended or modified in whole or in part only
by an agreement in writing executed by Buyer and Seller and making
specific reference to this Agreement.


 


13.3        
Counterparts. This Agreement
may be executed in one or more counterparts (including by means of
facsimile or other electronic means), each of which shall be deemed
an original but all of which together will constitute one and the
same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile or other electronic means shall
be effective as delivery of an originally executed counterpart to
this Agreement.


 


13.4           Binding
on Successors and Assigns. This Agreement
shall be binding upon, inure to the benefit of and be enforceable
by and against the parties hereto and their respective successors
and assigns in accordance with the terms hereof. No party may
assign its interest under this Agreement without the prior written
consent of the other party, which consent shall not be unreasonably
withheld, conditioned or delayed; provided that Buyer may assign their
rights and interests to any of their controlled Affiliates, but
Buyer remain responsible in all respects for any of their
obligations and duties under this Agreement. Any purported
assignment or delegation in violation of this Section 13.4 shall be null
and void. For the avoidance of doubt, a change of control of either
Buyer or Seller shall not be deemed an assignment.


 


13.5           Severability.
In the event that any one or more of the provisions contained in
this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement and
any other application thereof shall not in any way be affected or
impaired thereby; provided, however, that to the extent
permitted by applicable Law, any invalid, illegal, or unenforceable
provision may be considered for the purpose of determining the
intent of the parties in connection with the other provisions of
this Agreement.


 


13.6           Waivers.
Buyer and Seller may, by written agreement, (a) extend the
time for the performance of any of the obligations or other acts of
the parties hereto, (b) waive any inaccuracies in the
representations contained in this Agreement or in any document
delivered pursuant to this Agreement, (c) waive compliance
with, or modify, any of the covenants or conditions contained in
this Agreement, and (d) waive or modify performance of any of
the obligations of any of the parties hereto; provided that no such waiver or failure
to insist upon strict compliance with such obligation, covenant,
agreement or condition shall operate as a waiver of, or an estoppel
with respect to, any subsequent insistence upon such strict
compliance other than with respect to the matter so waived or
modified. Notwithstanding the foregoing, if (a) a party fails to
provide written notice of an alleged violation of this contract, as
provided herein, within one (1) year of the alleged violation or
the date on which the complaining party should reasonably have
become aware of such alleged violation, whichever is later, or (b)
the alleged violation is not still in existence on the date of said
notice and/or (c) the alleged violation has been ratified by the
complaining party prior to said notice, such alleged violation
shall be waived but only as to said specified instance and not as
to all future occurrences of said alleged violation.


 


 




 

-46-








 






 


13.7           Press
Releases and Public Announcements. Except as
required by applicable Law, including the United
States federal securities Laws or listing agreement with any
securities exchange, no party to this Agreement shall, nor permit
its Affiliates to, make any public announcement or press release
with respect to this Agreement or the transactions contemplated
hereby; provided,
however, that such
a public announcement or press release may be issued at such time
and in such manner as Buyer and Seller shall mutually agree and
determine.


 


13.8           Headings.
The headings in the sections and subsections of this Agreement and
in the Schedules are inserted for convenience only and in no way
alter, amend, modify, limit or restrict the meaning or
interpretation of contractual obligations of the parties under this
Agreement.


 


13.9           Entire
Agreement. All prior
negotiations and agreements between the parties hereto are
superseded by this Agreement (except with respect to the
Confidentiality Agreement) and the Other Agreements, and there are
no representations, warranties, understandings or agreements other
than those expressly set forth herein, in an Other Agreement, or in
a Schedule delivered pursuant hereto, except as modified in writing
concurrently herewith or subsequent hereto.


 


13.10         
Choice of
Law. This Agreement
shall be governed, construed, and enforced in accordance with the
Laws of the State of Delaware without regard to the conflicts of
law principles thereof.


 


13.11        
Venue. Any and all
actions brought in court shall be filed in a state or federal
district court located in Delaware and the parties specifically
consent and submit to the jurisdiction and venue of each such state
or federal court. Each party further agrees that service of any
process, summons, notice or document by United
States registered mail to such party’s respective
address set forth above shall be effective service of process for
any action with respect to any matters to which it has submitted to
jurisdiction in this Section 13.11. Each party
irrevocably and unconditionally waives any objection to the laying
of venue of any action arising out of this Agreement, the Other
Agreements or the transactions contemplated hereby or thereby in
any such court, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any
such action brought in any such court has been brought in an
inconvenient forum.


 


13.12        
Waiver of Jury Trial
Rights. EACH OF THE
PARTIES HERETO EXPRESSLY WAIVES ITS RIGHTS TO A TRIAL BY JURY IN
ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM
THIS AGREEMENT, THE OTHER AGREEMENTS OR THE MATTERS CONTEMPLATED
HEREBY OR THEREBY. EACH OF THE PARTIES ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN
FUTURE DEALINGS. EACH OF THE PARTIES HERETO FURTHER REPRESENTS AND
WARRANTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO A TRIAL
BY JURY FOLLOWING CONSULTATION WITH LEGAL COUNSEL.


 


 




 

-47-








 






 


13.13            
No Third-Party
Rights. Other than
Sections which are specifically for the benefit of Buyer
Indemnified Parties or the Seller Indemnified Parties, this
Agreement is not intended and shall not be construed to create any
rights in any Persons other than Buyer and Seller, and no Person
shall assert any rights as third-party beneficiary hereunder.
Notwithstanding the foregoing, Seller and Founder agree that Lewis
shall have the right to direct Seller to exercise Seller’s
right to provide an Election Notice to Buyer to receive up to
100,000 shares of Common Stock of Novume Solutions Inc., which
shares shall be distributed to Lewis by Seller within 90 days
following the Closing Date. For the avoidance of doubt, such third
party right shall not affect Seller’s right to provide an
Election Notice to Buyer for up to 1,000,000 shares of Common Stock
of Novume Solutions Inc.. Notwithstanding anything to the contrary
herein, the total aggregate amount of shares of Common Stock of
Novume Solutions Inc., which Buyer may be obligated to provide to
Seller pursuant to this Agreement shall not exceed
1,000,000.


 


13.14  
       Transfer
Taxes. Buyer shall be
responsible for and pay fifty percent (50%) of all applicable
Transfer Taxes. Seller shall be responsible for and pay the
remainder of such Transfer Taxes. Seller shall file any applicable
Tax Returns related to Transfer Taxes, with the cooperation of
Buyer, if necessary.


 


13.15          
Expenses. Except as
expressly provided otherwise herein, Seller, on the one hand, and
Buyer, on the other, shall pay all costs and expenses incurred by
them or on their behalf in connection with this Agreement and the
transactions contemplated hereby, including, without limiting the
generality of the foregoing, fees and expenses of their own
financial consultants, accountants and counsel.


 


13.16          
Specific
Performance. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at
law in the event that any of the provisions of this
Agreement were not performed in
accordance with their specific terms or were otherwise breached.
Therefore, in addition to any other right or remedy to which any
party may be entitled at law or in equity, the obligations
of Seller under this
Agreement, including
Seller’s obligation to sell
the Transferred Assets to Buyer, and
the obligations of Buyer under
this Agreement,
including Buyer’s obligation to
purchase and acquire the Transferred Assets and assume the Assumed Liabilities
from Seller and Seller Subsidiaries, and Seller’s and Buyer’s respective obligations, shall be
enforceable by a decree of specific performance issued by the Court
of Chancery of the State of Delaware or, if under applicable
Law exclusive jurisdiction over such
matter is vested in the federal courts, any court of the United
States located in the State of Delaware, and appropriate injunctive
relief may be applied for and granted in connection therewith, this
being in addition to any other remedy to which such party is
entitled at law or in equity. Each of the parties agrees that
it will not oppose the granting
of an injunction, specific performance and other equitable relief
on the basis that the party seeking the injunction, specific
performance and other equitable relief has an adequate remedy of
law.


 


 




 

-48-








 






 


13.17          
Confidentiality.
The terms of the Confidentiality Agreement are hereby incorporated
herein by reference and shall continue in full force and effect
until the Closing, at which time such Confidentiality Agreement and
the obligations of Buyer under this Section 13.17 shall
terminate. If this Agreement is, for any reason, terminated prior
to the Closing, the Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.


 


13.18           
No
Recourse. This Agreement may not be enforced against, and no Claims
or causes of action that may be based
upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of
this Agreement may be made
against, any former, current or future director, officer,
agent, Affiliate (other
than Buyer and its successors
and permitted assignees), manager, assignee or employee of
Buyer (or any of its successors or
permitted assignees), any former, current or future general or
limited partner, manager, member or stockholder of Buyer
(or any of its successors or permitted
assignees) or any Affiliate thereof (other than Buyer and its successors and permitted assignees) or any
former, current or future director, officer, agent,
employee, Affiliate (other
than Buyer and its successors
and permitted assignees), assignee, general or limited partner,
stockholder, manager or member of any of the foregoing (other
than Buyer) (the foregoing
persons, other than Buyer and
its successors and permitted assignees, collectively, the
“Buyer
Protected Parties”), none
of the Buyer Protected Parties shall have any liability for any obligations
or liabilities of Buyer
or any Affiliate under this Agreement or for any Claims based on, or by reason of, the transactions
contemplated by this Agreement and in no event shall Seller or any of its Affiliates, and Seller agrees not to and to cause its Affiliates
not to, seek to enforce this
Agreement against, make any
Claims for breach of this
Agreement against, or seek to recover
monetary damages from any Buyer Protected Party.


 


13.19           
Release. As a material
inducement to Buyer to enter into this Agreement, Founder and
Seller, on his or its own behalf and on behalf of his or its
Affiliates, agrees not to sue and fully releases and forever
discharges Buyer and its respective directors, officers, employees,
members, managers, shareholders, agents, assigns and successors,
past and present (collectively, the “Released Persons”), with
respect to and from any and all Proceedings, demands, rights,
liens, Contracts, covenants, Liabilities, debts, expenses
(including reasonable attorneys’ fees) and Losses of whatever
kind or nature in law, equity or otherwise, whether now known or
unknown, and whether or not concealed or hidden; provided, that nothing in this
Section 13.19
shall prohibit Seller or Founder from enforcing his or its rights
under this Agreement; provided, further, that nothing in this
Section 13.19
shall constitute a release by Founder of Founder’s right to
receive any unpaid salary, expense reimbursement and/or other
employment-related compensation accrued in the Ordinary Course of
Business after the Closing pursuant to the Founder Employment
Agreement. Without limiting the generality of the foregoing,
Founder and Seller hereby waive, release and agree not to make any
claim or bring any contribution, cost recovery or other action
against Buyer, except as provided above. It is the intention of
Founder and Seller that such release be effective as a bar to each
and every demand and Proceeding hereinabove specified and in
furtherance of such intention, Seller and Founder, on his or its
own behalf and on behalf of his or its Affiliates, hereby expressly
waives, effective as of the Closing, any and all rights and
benefits conferred upon such Person by the provisions of applicable
Law (except as provided above) and expressly agrees that this
release will be given full force and effect according to each and
all of its express terms and provisions, including those related to
unknown and unsuspected demands and Proceedings, if any, as those
relating to any other demands and Proceedings hereinabove
specified, but only to the extent such provision is applicable to
releases such as this.


 



[The remainder of the page is intentionally left
blank.]




 

-49-








 






IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized Representatives on the day and
year first above written.


 


 


 


	

 

	


SELLER:


 


OPENALPR
TECHNOLOGY, INC.

  


	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
/s/ Matthew
Hill


	

 


	

 

	

Name:


	
Matthew
Hill


	

 


	

 

	

Title:
 

	

Chief
Executive Officer

	

 







 







 




 


 


 



[Signature Page to Asset Purchase Agreement]


 


 








 






IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized Representatives on the day and
year first above written.


 


 


	

 

	


BUYER:


 


NOVUME
SOLUTIONS, INC.

  


	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
/s/ Robert
Berman


	

 


	

 

	

Name:


	
Robert
Berman

	

 


	

 

	

Title:
 

	

Chief
Executive Officer

	

 







 







 


 


 




 


 


 



[Signature Page to Asset Purchase Agreement]


 


 








 






 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized Representatives on the day and
year first above written.


 


 


	

 

	
 

	

 


	

 

	

 

	

 

	

 


	
 

	
  

	
/s/ Matthew
Hill


	

 


	

 

	

 

	
MATTHEW
HILL

	

 


	

 

	

 

	

 

	

 







 


 







 




 


 


 



[Signature Page to Asset Purchase Agreement]


 


 








 






Schedule
A



Definitions


 


For
purposes of the Agreement (including this Schedule A):


 


“Accounting Principles”
means GAAP.


 


“Adjustment Time” means
11:59 p.m. Eastern Standard Time on the day immediately prior to
the Closing Date.


 


“Affiliate” means with
respect to any specified Person, any other Person which, directly
or indirectly, controls, is under common control with, or is
controlled by, such specified Person. The term
“control” (including the terms “controlled
by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of more than 50% of voting equity
ownership of such Person (or securities convertible or exchangeable
into more than 50% of such voting equity ownership interest),
by Contract or otherwise.


 


“AML Laws” means all U.S.
and non-U.S. Laws relating to money laundering, including the
Currency and Foreign Transactions Reporting Act of 1970 (most
commonly referred to as the Bank Secrecy Act), as amended by the
Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (“USA PATRIOT”) Act of 2001
and other relevant Laws.

 


“Anti-Corruption Laws”
means all U.S. and non-U.S. Laws relating to the prevention of
corruption or bribery, including the U.S. Foreign Corrupt Practices
Act of 1977, as amended, and the UK Bribery Act 2010.


 


“Antitrust Laws” means the
HSR Act, the Sherman Act, as amended, the Clayton Act, as amended,
the Federal Trade Commission Act, as amended, and any other United
States federal, state, local or foreign Law that is designed to
prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint of trade,
or that requires premerger notification and approval of mergers,
acquisitions, or other transactions.


 


“Base Purchase Price”
means $15,000,000 or, to the extent that Seller has provided Buyer
with the Election Notice, an amount in cash equal to $15,000,000
minus the Election Amount.


 


“Benefit Plan” means any
employee benefit plan within the meaning of Section 3(3) of ERISA,
and each bonus, deferred compensation, incentive compensation,
equity incentive, severance, salary continuation, retention,
change-in-control or termination pay, paid time off, medical,
welfare, disability, life, supplemental unemployment benefits,
profit-sharing, fringe benefit, pension or retirement plan,
program, agreement or arrangement, written or unwritten, sponsored,
maintained or contributed to or required to be contributed to by
Seller, any Seller Subsidiary or ERISA Affiliate for the benefit of
Business Employees, but excluding the Employment
Agreements.


 


“Business” means the
business of Seller and the Seller Subsidiaries.


 


 




 








 






 


“Business Customer” means
any Person that (i) has been a customer of the Business at any time
during the twelve (12) months preceding the Closing Date or (ii) is
a prospective customer of the Business as of the Closing
Date.


 


“Business Day” means any
day except Saturday, Sunday or any other day on which commercial
banks in the State of Delaware are authorized or required by Law to
be closed for business.


 


“Business Employee” means
an employee of Seller or any of the Seller
Subsidiaries.


 


“Business Proprietary
Software” means all Software included in the Owned
Business IP.


 


“CERCLA” has the meaning
set forth in the definition of Hazardous Substances.


 


“Claim” means any and all
claims or other Proceedings for liabilities, losses, damages,
deficiencies, demands, fines, penalties, interest, assessments,
judgments, Liens, charges, Orders, dues, and assessments, of
whatever kind and nature and all costs and expenses relating
thereto, including fees and expenses of counsel, accountants and
other experts, and other expenses of investigation and
litigation.


 


“Code” means the U.S.
Internal Revenue Code of 1986, as amended.


 


“Copyrights” has the
meaning set forth in the definition of Intellectual
Property.


 


“Current Assets” means all
Transferred Assets that are categorized as current assets in
accordance with the Accounting Principles.

 


“Current Liabilities”
means all Transferred Assumed Liabilities that are categorized as
current liabilities in accordance with the Accounting
Principles.


 


“Disclosure Schedule”
means the disclosure schedule to this Agreement, attached hereto
and made a part hereof.


 


“Election Amount” means
the product of (x) such number of shares of Common Stock of Novume
Solutions, Inc. as set forth in the Election Notice multiplied by
(y) Five Dollars ($5).


 


“Employment Agreement”
means a Contract of a Seller or any of its Affiliates (including
any Seller Subsidiary) with any Disclosure Employee (other than
at-will employees), to which Seller or any of its Affiliates
(including a Seller Subsidiary) has any actual or contingent
liability or obligation to provide compensation and/or benefits in
consideration for past, present or future services.


 


“Environment” means
surface or subsurface soil or strata, surface waters and sediments,
navigable waters, wetlands, groundwater, sediments, drinking water
supply, ambient air, species, plants, wildlife, animals and natural
resources.


 


 




 








 






 


“Environmental Laws” means
any Laws of any Governmental Authority in effect as of the Closing
Date relating to the Environment (including, without limitation,
ambient air, surface, water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to
the Environment including, without limitation, relating to
(a) Releases or threatened Releases of Hazardous Substances or
materials containing Hazardous Substances; (b) the
manufacture, handling, processing, distribution, transport, use,
treatment, storage or disposal of Hazardous Substances or materials
containing Hazardous Substances; (c) pollution or protection
of the Environment, health, safety or natural resources from
Hazardous Substances; or (d) management of asbestos in
buildings.


 


“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and any
regulations or rules issued pursuant thereto.


 


“ERISA Affiliate” means
any entity that would have ever been considered a single employer
with Seller or any Seller Subsidiary under Section 4001(b) of ERISA
or part of the same “controlled group” as Seller or any
Seller Subsidiary for purposes of Section 302(d)(3) of
ERISA.


 


“Estimated Purchase Price”
means (a) the Base Purchase Price, plus (b) the Estimated Net
Working Capital Adjustment.


 


“Ex-Im Laws” means all
Laws relating to export, reexport, transfer, and import controls,
including those administered by the United States (including by the
U.S. Department of Commerce, the U.S. Department of State, or U.S.
Customs and Border Protection), the European Union, any EU Member
State, or any other relevant Governmental Authority.

 


“Final Purchase Price”
means (a) the Base Purchase Price, plus (b) the Net Working
Capital Adjustment, all as finally determined pursuant to
Section
2.7(e).

 


“Fundamental
Representations” means the representations and
warranties set forth in Section 3.1 (Status of Seller
and the Seller Subsidiaries); Section 3.2(a) and (c)
(Authorization); Section
3.5(a) (Personal Property), Section 3.6 (Intellectual
Property and Technology); Section 4.1 (Status of
Buyer); and Section 4.2(a)
and (c) (Authorization).

 


“GAAP” means accounting
principles generally accepted in the United States as in effect
from time to time and as consistently applied through the periods
involved.


 


“Government Official”
means any foreign official or employee, foreign political party or
official thereof, or candidate for foreign political office, or any
person acting in an official capacity for or on behalf of any
foreign government, department, agency, or instrumentality, or on
behalf of any public organization, as such terms are defined under
applicable Anti-Corruption Laws.


 


 “Governmental
Authority” means any federal, national, state,
regional, county, municipal, local or foreign court, arbitral
tribunal, agency, board, bureau or commission or other governmental
or other regulatory authority or instrumentality anywhere in the
world.


 


 


 




 








 






 


“Hazardous Substances”
means (a) those substances, waste materials, raw materials or
finished products, defined in or regulated under the Hazardous
Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), the Clean Water
Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean
Air Act, and their state counterparts, each as in effect on the
Closing Date, and all regulations thereunder; (b) petroleum
and petroleum products, including crude oil and any fractions
thereof; (c) natural gas, synthetic gas, and any mixtures
thereof; (d) polychlorinated biphenyls, asbestos or
asbestos-containing materials, urea formaldehyde foam insulation,
any form of natural gas, explosives, radioactive materials,
ionizing radiation, electromagnetic field radiation or microwave
transmissions and radon; and (e) any pollutant, contaminant,
substance, material or waste regulated by any Governmental
Authority pursuant to any Environmental Law.


 


“HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.


 


“Indebtedness” means with
respect to any Person, as of any time, without duplication, the
aggregate amount of (i) any obligations of such Person arising
under any indebtedness for borrowed money (including all
obligations for principal, interest premiums, penalties, fees,
expenses, breakage costs and bank overdrafts thereunder), (ii) any
indebtedness of such Person evidenced by any note, bond, debenture
or other debt security, (iii) any commitment by which such Person
assures a financial institution against loss (including contingent
reimbursement obligations with respect to banker’s
acceptances or letters of credit), (iv) any liability of such
Person with respect to interest rate swaps, collars, caps and
similar hedging obligations, (v) any off-balance sheet financing of
such Person, including synthetic leases and project financing, (vi)
all obligations of such Person under capitalized leases, (vii) all
obligations of such Person for the deferred and unpaid purchase
price of property or service (other than trade payables and accrued
expenses incurred in the Ordinary Course of Business), including
any earn out obligations, (viii) all accrued defined benefit
pension, multiemployer pension, post-retirement health and welfare
benefit and deferred compensation liabilities of such Person as
determined in accordance with GAAP, (ix) any obligations of such
Person upon which interest charges are customarily paid (excluding
trade accounts payable incurred in the Ordinary Course of
Business), (x) any obligations of such Person under conditional
sale or other title retention agreements, (xi) any amounts payable
with respect to any Affiliate transaction, and (xii) all
obligations of the type referred to in clauses (i) through (xi) of
any Persons the payment of which such Person is responsible or
liable directly or indirectly as obligor, guarantor, surety or
otherwise.


 


 




 








 






 


“Intellectual
Property” means any and
all of the following in any jurisdiction throughout the world (i)
inventions, including patents and applications therefor and patent disclosures
and improvements thereto (including any continuations, continuations-in-part,
divisionals, reissues, renewals, extensions or modifications of any
of the foregoing) (collectively, “Patents”); (ii) trademarks, trade names,
service marks, service names,
brand names, certification marks, trade dress rights, slogans, product
designations, logos, designs, corporate names and rights in
telephone numbers, and any other indicia of source or origin
together with all translations, adaptations, derivations,
abbreviations, acronyms, and combinations thereof, all
applications, registrations, and renewals in connection therewith,
and all goodwill associated with each of the foregoing
(collectively, “Marks”); (iii) copyrights, copyright registrations and applications
therefor and all other rights in works of authorship corresponding
thereto (collectively,
“Copyrights”); (iv) all rights in or to Uniform
Resource Locators, website addresses
and domain names; (v) Software,
(vi) all rights of privacy and publicity, including
rights to use of the names,
likenesses, voices, signatures, and biographical information of
real persons, (vii) trade secrets rights and all other rights in or
to confidential business or technical information that derive
economic value from being held in confidence (including
ideas, know-how, processes, methods,
techniques, research and development, drawings, specifications,
layouts, designs, formulae, algorithms, compositions, industrial
models, architectures, plans, proposals, technical data,
financial, business and
marketing plans and proposals, customer and supplier lists, and
price and cost information) (collectively,
“Trade
Secrets”), and
(viii) any similar, corresponding or equivalent rights to
any of the foregoing anywhere in the world, including documentation and other tangible embodiments of
any of the foregoing.


 


“IRS” means the Internal
Revenue Service of the United States.


 


“Knowledge” means, with
respect to a Person and a given fact or matter, that such Person
has actual knowledge of such fact or matter following reasonable
inquiry consistent with such Person’s position with Seller or
Buyer, as the case may be. With respect to Seller,
“Knowledge” means the Knowledge of Matthew Hill. With
respect to Buyer, “Knowledge” means the Knowledge of
the senior management of Buyer.


 


“Law” means any federal,
state, local or foreign law, statute, rule, code, regulation,
ordinance, Order, Permit or directive of, or issued by, any
Governmental Authority, including, without limitation, the
Antitrust Laws, and any Environmental Laws.


 


“Lien” means any mortgage,
deed of trust, lien, pledge, charge, security interest, option,
restriction on transferability or voting, limitation, easement,
title defect or other adverse Claim of ownership or use, or other
encumbrance of any kind, character or description, whether or not
of record (including any deposit, conditional or installment sale,
other title retention Contract or capital lease), any lease in the
nature thereof, or any filing of, or agreement to give, any
financing statement.


 


“Losses” means all losses,
obligations, deficiencies, liabilities, actions, claims, causes of
actions, damages, demands, penalties, fines, amounts paid in
settlement, judgments, awards, Liens, costs of investigation,
Taxes, expenses and fees, whether or not arising out of Third Party
Claims (including interest, penalties, reasonable attorneys’,
consultants’ and experts’ fees and expenses and all
amounts paid in investigation, defense or settlement of any of the
foregoing).

 


“Marks” has the meaning
set forth in the definition of Intellectual Property.


 


 




 








 






 


“Material Adverse Effect”
means any change, development, effect, event or state of facts
which, individually or in the aggregate, has had or reasonably
would be expected to (i) have a material adverse effect on the
Transferred Assets, the condition (financial or otherwise) or
results of operations of the Business, taken as a whole, or (ii)
materially delay or materially impede the ability of Seller to
consummate the transactions contemplated by this Agreement;
provided
that none of the
following shall be deemed to constitute, and no changes,
circumstances, developments, state of facts, events or effects
resulting from or arising out of the following shall be taken into
account in determining whether a Material Adverse Effect has
occurred, or may, would or could occur: (a) conditions
affecting United States or foreign economic, financial, banking,
currency or capital markets generally or any changes therein,
(b) national or international political, industry or social
conditions (including the engagement in hostilities or the
occurrence of any national emergency or war or the occurrence of
any military or terrorist attack or the disruption of financial,
banking or securities markets (including any decline in the price
of any security or any market index)), (c) changes in Laws issued
by any Governmental Authority or changes in GAAP, (d) the
announcement of the transactions contemplated hereby, (e) the
effect of any action or inaction taken by Buyer or its Affiliates
(provided such action was without the participation or consent of
Seller) with respect to the transactions contemplated hereby, (f)
the performance by Seller or its Affiliates of any action, or the
failure to take any action, in each case at Buyer’s written
request or pursuant to this Agreement or the Other Agreements, and
(g) in and of itself, any failure of Seller or the Business to meet
any projections or estimates for any period; provided further that with respect to
the conditions set forth in clauses (a) through (c), such changes,
circumstances, events, conditions or effects do not
disproportionately impact the Business relative to other Persons
who operate in the same industry as the Business.


 


“Multiemployer Plan” has
the meaning as provided in Section 3(37) and Section 4001(a)(3) of
ERISA.


 


“Net Working Capital”
means an amount equal to the Current Assets less the Current
Liabilities (whether positive or negative), as of the Adjustment
Time.


 


“Net Working Capital
Adjustment” means (a) if the Net Working Capital
exceeds the NWC Target Amount, then the amount by which Net Working
Capital exceeds the NWC Target Amount; or (b) if the NWC Target
Amount exceeds the Net Working Capital, then the amount by which
the NWC Target Amount exceeds the Net Working Capital; provided,
that any amount which is calculated pursuant to clause (b) above
shall be deemed to be a negative number.


 


“NWC Target Amount” equals
$50,000.


 


“OFAC” has the meaning set
forth in the definition of Sanctioned Person.


 


“Off-the-Shelf Software
Licenses” means licenses for commercially available,
unmodified, off-the-shelf Software used by Seller solely for their
own internal use with a replacement cost or aggregate fee, royalty,
or other consideration for any such Software or group of related
Software licenses of no more than $10,000.


 


 




 








 






 


“Open Source Software”
means, collectively, Software that is distributed as “free
software” (as defined by the Free Software Foundation),
“open source software” (meaning Software distributed
under any license approved by the Open Source Initiative as set
forth at www.opensource.org) or under a similar licensing or
distribution model (including under a GNU General Public License
(GPL), a GNU Lesser General Public License (LGPL), a Mozilla Public
License (MPL), a BSD license, an Artistic License, a Netscape
Public License, a Sun Community Source License (SCSL), a Sun
Industry Standards License (SISL), and/or an Apache
License).


 


“Order” means any award,
decision, injunction, judgment, stipulation, order, ruling,
subpoena, writ, determination, decree, consent decree or verdict
entered, issued, made or rendered by any arbitrator or Governmental
Authority (whether temporary, preliminary or
permanent).


 


“Ordinary Course of
Business” means the ordinary course of conduct of the
Business, which is consistent with past practices of the
Business.


 


“Other Agreements” means
the Assignment and Assumption Agreement, Bills of Sale, the IP
Assignments, the Employment Agreement, and each other agreement,
instrument or other document required to be executed by any of
Buyer, Founder or Seller in connection with the transactions
contemplated by this Agreement.


 


“Owned Business IP” means all Business Intellectual
Property owned or purported to be
owned by Seller.


 


“Patents” has the meaning
set forth in the definition of Intellectual Property.


 


“Permit” means any
material permit, authorization, approval, registration, license,
franchise, certificate, exemption, waiver or variance issued or
granted by or obtained from any Governmental
Authority.


 


“Permitted Encumbrances”
means (a) Liens for Taxes not yet due and payable,
(b) Liens disclosed in the Financial Statements (solely
through the period immediately prior to the Closing Date),
(c) restrictions on the use of Software and related documents
licensed from third parties to the extent disclosed on the
Disclosure Schedule, (d) non-exclusive licenses of Intellectual
Property, (e)(i) Liens imposed by Law and incurred in the
Ordinary Course of Business for obligations not yet due and payable
to landlords, carriers, warehousemen, laborers, materialmen and the
like (solely through the period immediately prior to the Closing
Date), all of which shall be discharged prior to the Closing,
(ii) easements, building restrictions, rights of way,
reservations and such similar encumbrances or charges against real
property as are of a nature generally existing with respect to
properties of a similar character and which do not in any material
way affect the use thereof in the Business, and (iii) the
Liens set forth on Section 1.1 of the Disclosure
Schedule (solely through the period immediately prior to the
Closing Date); (f) with respect to any Contract, any Lien imposed
on such Contract (or any right thereunder) pursuant to the terms
and conditions of such Contract which do not individually or in the
aggregate, materially impair the continued ownership, use and
operation of such Contracts; (g) Liens incurred in the Ordinary
Couse of Business in connection with
workers’ compensation and unemployment insurance or similar
laws; and (h) other
imperfections of title or other de minimis encumbrances, if any,
which do not, individually or in the aggregate, materially impair
the continued ownership, use and operation of the assets to which
they relate in the conduct of the Business as presently
conducted.


 


 




 








 






 


“Person” means an
individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, a governmental
entity or any agency, instrumentality or political subdivision of a
Governmental Authority, or any other entity or body.


 


“Personal Information”
means (a) any information with respect to which there is a
reasonable basis to believe that the information can be used to
identify an individual, including demographic information; (b)
Social Security numbers; or (c) any information that is regulated
or protected by one or more Privacy and Security Laws.


 


“Privacy and Security
Laws” means all applicable Laws concerning the privacy
and/or security of Personal Information, and all regulations
promulgated thereunder, including HIPAA, HITECH, the
Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, the Fair and
Accurate Credit Transaction Act, the Privacy Act of 1974, the
CAN-SPAM Act, the Telephone Consumer Protection Act, the
Telemarketing and Consumer Fraud and Abuse Prevention Act,
Children’s Online Privacy Protection Act, state Social
Security number protection Laws, state data breach notification
Laws, state consumer protection Laws, the European Union Directive
95/46/EC, the Dutch Personal Data Protection Act (WBP), the United
Kingdom’s Data Protection Act 1998 (DPA) and Alberta’s
Personal Information Protection Act.


 


“Proceeding” means any
claim, assertion, notice of claim or assertion, complaint, action,
litigation, suit, proceeding, formal investigation, inquiry, audit
or review of any nature, civil, criminal, regulatory,
administrative or otherwise, or any grievance, arbitration or
arbitration demand.


 


“Purchase Price Cap” means
an amount equal to the Final Purchase Price.


 


“Releases” has the meaning
set forth in Section 101(22) of CERCLA.


 


“Representative” means
with respect to any Person, (a) any director, officer,
partner, executor, trustee, employee, agent, consultant, advisor,
or other representative of such Person, (b) any Person with
respect to which such Person serves as a general partner or trustee
(or in a similar capacity), and (c) legal counsel, accountants
and financial advisors of such Person.


 


“Restricted Business” means the business of automotive
license plate reading and vehicle identification technology,
including the development, sale or license of Software or any
software as a service related thereto.


 


“Sanctioned Country” means any country or region that is the
subject or target of a comprehensive embargo under Sanctions
Laws (including Cuba, Iran, North Korea, Sudan, Syria, and the
Crimea region of the Ukraine, as may be amended from time to
time).


 


 




 








 






 


“Sanctioned Person” means any individual or entity that is the
subject or target of sanctions or restrictions under
applicable Sanctions Laws or Ex-Im Laws, including: (i) any
individual or entity listed on any applicable U.S. or non-U.S.
sanctions- or export-related restricted party list,
including the List of Specially
Designated Nationals and Blocked Persons administered by the U.S.
Department of Treasury’s Office of Foreign Assets Control
(“OFAC”); (ii) any
entity that is, in the aggregate, 50 percent or greater owned or
otherwise controlled by,
directly or indirectly, one or more individuals or entities
described in clause (i); or
(iii) a national of any Sanctioned Country.


 


“Sanctions Laws” means all Laws relating to economic or trade sanctions
administered or enforced by the United States (including
by OFAC or the U.S. Department of State), the United
Nations Security Council, the European Union, any EU Member State,
or any other relevant Governmental Authority.


 


“Seller Expenses” means any expenses incurred by Seller or
Founder in connection with this Agreement or any Other
Agreement.


 


“Sensitive Information”
means privileged or proprietary information which, if compromised
through alteration, corruption, loss, misuse, or unauthorized
disclosure, could cause serious harm to the organization owning it.
Sensitive Information includes information covered by Law and/or
regulatory requirements, including the Privacy and Security
Laws.


 


“Software” means computer
programs and software, including data files, source code, object
code, firmware, application programming interfaces, architecture,
documentation, files, records, schematics, emulation and simulation
reports, test vectors and hardware development tools, databases and
other software-related specifications and
documentation.


 


“Tax” means all federal,
territorial, state, provincial, local or foreign government taxes,
levies, assessments, duties, imposts or other like assessments,
charges or fees (including estimated taxes, charges and fees),
including, without limitation, income, profits, gross receipts,
transfer, excise, property, sales, use, value-added, ad valorem,
license, excise, capital, wage, employment, payroll, withholding,
Social Security, Medicare, severance, occupation, import, custom
duties, stamp, documentary, mortgage, registration, alternative,
add-on minimum, environmental, franchise or other governmental
taxes or charges of any kind whatsoever, whether disputed or not,
imposed by any Governmental Authority responsible for the
imposition of any such tax, including any interest, penalties,
fines or additions to tax applicable or related thereto, and also
including all amounts described above payable as a result of having
been a member of a consolidated, combined, affiliated or unitary
group, or as a result of successor or transferee liability, or by
contract.


 


“Tax Returns” means,
collectively, all reports, declarations, filings, estimates,
returns, information statements and similar documents required to
be filed (including electronically) with any Governmental Authority
in respect of, any Taxes, including, without limitation, any
schedule or attachment thereto and any amendments
thereof.


 


“Trade Secrets” has the
meaning set forth in the definition of Intellectual
Property.


 


“Transfer Taxes” means all applicable sales, transfer,
goods and services, excise, stamp, documentary, use, filing and
other similar Taxes and fees
that may become due or payable (and are not subject to an
exemption) as a result of the sale, conveyance, assignment,
transfer or delivery of the Transferred Assets, whether levied on Buyer or Seller, including all related interest, penalties and additions
to Tax.


 


 




 








 






 


Terms Defined Elsewhere in this
Agreement. For purposes of this Agreement, the following
terms have the meanings set forth in the Sections
indicated:


 


	

Term:

	
 

	

Section:


	

Acquisition

	
 

	

2.1


	

Acquisition
Proposal

	
 

	

5.6


	

Agreement

	
 

	

Preamble


	

Allocation
Statement

	
 

	

2.9


	

Apportioned
Obligations

	
 

	

6.1(b)


	

Assignment
and Assumption Agreement

	
 

	

10.1(c)


	

Assumed
Liabilities

	
 

	

2.4


	

Audited
Financial Statements

	
 

	

5.3(c)


	

Auditor

	
 

	

5.3(c)


	

Auditor
Review Period

	
 

	

2.7(d)(iv)


	

Bills
of Sale

	
 

	

10.1(b)


	

Business
Confidential Information

	
 

	

5.5


	

Business
IP Licenses

	
 

	

3.6(a)


	

Buyer

	
 

	

Preamble


	

Buyer
Compliance Certificate

	
 

	

10.2(a)


	

Buyer
Indemnified Parties

	
 

	

12.2(a)


	

Buyer
Protected Parties

	
 

	

0


	

Closing

	
 

	

2.6(b)


	

Closing
Balance Sheet

	
 

	

2.7(d)(i)


	

Closing
Date

	
 

	

2.6(b)


	

Closing
Statement

	
 

	

2.7(d)(i)


	

Closing
Statement Review Period

	
 

	

2.7(d)(ii)


	

Confidentiality
Agreement

	
 

	

5.4(a)


	

Contracts

	
 

	

2.2(a)


	

Disclosure
Employees

	
 

	

7.1


	


Dispute Notice  

	
 

	


12.7  


	


Disputed Allocation Items  

	
 

	


2.9  


	

Disputed
Item

	
 

	

2.7(d)(iii)


	

Election
Notice

	
 

	

2.7(a)


	

Equitable
Exceptions

	
 

	

3.2(c)


	

Estimated
Closing Balance Sheet

	
 

	

2.7(b)


	

Estimated
Net Working Capital Adjustment

	
 

	

2.7(b)(i)


	

Excluded
Assets

	
 

	

2.3


	

Exclusivity
Period

	
 

	

5.6


	


Financial Statements  

	
 

	


3.3(a)  


	

Founder
Employment Agreement

	
 

	

Recitals


	

Indemnified
Party

	
 

	

12.5(b)


	

IP
Assignments

	
 

	

10.1(d)


	

Labor
Laws

	
 

	

3.8(a)(i)


	

Lewis

	
 

	

3.1


	

Liabilities

	
 

	

2.4


	

Liability
Limit

	
 

	

12.3


	

Material
Contract

	
 

	

3.7(a)


	

Notice
of Disagreement

	
 

	

2.7(d)(iii)


	

Outside
Closing Date

	
 

	

11.2


	

Post-Closing
Tax Period

	
 

	

6.1(b)


	

Pre-Closing
Tax Period

	
 

	

6.1(b)


	

Preliminary
Closing Statement

	
 

	

2.7(b)


	

Purchase
Price

	
 

	

2.7(a)


	

Released
Persons

	
 

	

13.9


	

Resolution
Period

	
 

	

2.7(d)(iii)


	


Responsible Party  

	
 

	


12.6  


	

Retained
Liabilities

	
 

	

2.5


	

Retained
Litigation

	
 

	

2.3(b)


	

Schedule
Supplement

	
 

	

5.8


	

Securities
Act

	
 

	

3.20


	

Seller

	
 

	

Preamble


	

Seller
Compliance Certificate

	
 

	

10.1(a)


	

Seller
Indemnified Parties

	
 

	

12.2(b)


	

Seller
Claims

	
 

	

2.2(b)


	

Seller
Subsidiaries

	
 

	

Recitals


	

Straddle
Period

	
 

	

6.1(b)


	

Tax
Claim

	
 

	

6.3(a)


	

Third
Party Claim

	
 

	

12.6


	

Transferred
Assets

	
 

	

2.2


	

Transferred
Contracts

	
 

	

2.2(a)


	

Transferred
Employees

	
 

	

7.1


	

Transferred
Intellectual Property

	
 

	

2.2(f)


	

Transferred
Leases

	
 

	

2.2(l)


	

Transferred
Registered IP

	
 

	

2.2(e)